Indian Journal of Democratic Governance

Indian Journal ofDemocratic Governance

Volume I, Issue 2

Dr. Vinay Sahasrabuddhe

(Editor in Chief)

President, Indian Council for

Cultural Relations, New Delhi

Vice Chairman

Rambhau Mhalgi Prabodhini, Mumbai

National Vice President

Bhartiya Janata Party

Mohan Kashikar

Department of Political Science

Rashtrasant Tukdoji Maharaj

University

Nagpur, Maharashtra

Mahesh Bhagwat


Mithibai College, Vile Parle (W)

Mumbai, Maharashtra

P. Kanagasabapathi

Professor Emeritus

Madars Institute of Technology

Anna University, Tamilnadu

Ravi Pokharna

(Editorial Co-ordinator)

Executive Head (Projects &

Administration)

Rambhau Mhalgi Prabodhini

R. Balasubramaniam

Founder and Chairman

Grassroots Research and

Advocacy Movement (GRAAM)

Mysore, Karnataka

Dr. Jagdish Jadhav

(Associate Editor)

Associate Professor

Department of Social Work

Central University of Rajasthan

Santishree Dhulipudi Pandit

Professor, Department of Politics

and Public Administration

Savitribai Phule University of Pune

Maharashtra

Sushma Yadav

Vice Chancellor

Bhagat Phool Singh (BPS)

Mahila Vishwavidyalaya

Khanpur Kalan, Haryana

Ravindra Sathe

Director-General


ContentsIndian Journal of Democratic Governance

Volume I, Issue 2

Editorial �� 5

1� Getting to Good Governance: Contemporary Discourse for Reinvention of Government �� 7Pradeep V� Kamat

2� Governance of Institutions as Complex Adaptive Systems �� 17Prof� Rajiv Gupte

3� Housing for all: A Basic Need with Governance �� 23Dr� Krishna Dev

4� Demonetization, Digital and the Indian Economy �� 32Pankaj Sharma1 and Saurav Sanyal2

5� Doubling Farmers Income in India: A Policy Perspective �� 40Karan Bhasin1, Prachi Jhamb2 and Rutwik Jagannath3

6� Economic Democracy through Democratized Economics: From the Perspective of Marketing �� 56Harsh V Verma1 and Ishita Varma2

7 � The Effect of MGNREGA on Social, Economic and Political Empowerment of Women in Rural Rajasthan, India �� 65Dr� Rajeev M�M

8� Making Agriculture a tool of Inclusive Growth (Economic Democracy) “Farmer’s Welfare: From Vision to Reality” �� 72Santosh Gupta

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This is in continuation to the first issue of Indian Journal of Democratic Governance (IJDG), we have pleasure to present another

special issue for our vibrant readers� As we have decided to opt pertinent contemporary issue of democracy and governance for discussion, debate,and discourse, for the present issue, IJDG has chosen ‘One Nation -One Election’ theme, an extension to our national conclave� As usual readers may find fifty percentweightis devoted to deliberating upon this important issue of our democracy� As we all know, election and electoral systems are integral to political institutions that constitute the democracy�

Dr� Pradeep V� Kamat in his article titled ‘Getting to Good Governance: Contemporary Discourse for Reinvention of Government’ contextualize the Good Governance and emphasized that there is no option for good governance� Government must imbibe the governance as a part of its regular affairs� It is a basic right of all citizens, and the government is bound to provide it� Good governance can be a reality, provided every organ of Government works meticulously and with integrity� The second article, Prof� Rajiv Gupte reviews the various comments and observations related to the practice of governance and its various elements� The Professor started his article with the quote given by the Honorable Prime Minister Narendra Modi, “You cannot march through 21st century using19th-century tools� The world is even

Editorial

more interconnected and interdependent”� This underlines the significance of good governance and its practice in the country� Dr� Krishna Devis an infrastructure sector expert currently working as an independent consultant� He has worked as a consultant to the Planning Commission and was closely associated with the formulation of the 11th Five Year Plan and Annual Plans� In his article, ‘Housing for All: A Basic Need with Governance’ illustrates Government has formulated many policies to resolve issues related to housing and urban service delivery� The author opined that India’s housing requirements are complex but till now policies have been mostly focused on building more homes and on homeownership� There is a need to take a more holistic approach that takes into account rentals and vacancy rates� He argued that the policy-makers to pay more attention to contract enforcement, property rights and spatial distribution of housing supply vs� demand�

‘Demonetization, Digital,and the Indian Economy,’ another significant article is contributed by Pankaj Sharma, and Saurav Sanyal� This provides strong glimpses about Demonetization,and the pushes towards digital and cashless society are two separate initiatives, the developments intricately linked with each other� The article based on the perceptions of the people towards the most discussed two administrative actions taken by the current government and the article emphasizes these two actions are the important

Indian Journal of Democratic Governance

6

foundations of the success of note ban initiative of

Govt� of India� ‘Doubling Farmers Income in India:

A Policy Perspective’, the joint article presented by

Karan Bhasin, Prachi Jhamb and Rutwik Jagannath

recommended that in the long term there is a

need to treat agriculture as an enterprise geared

towards economic efficiency and generating profit;

In order to develop such a sector, it is important

to strengthen markets, both inputs, and outputs

and break the current agrarian relations�

Harsh V� Verma and Ishita Varma pointed out in

their article titled ‘Economic Democracy through

Democratized Economics: From the Perspective of

Marketing,’income earning capacity of individuals

can be democratized where the marginalized

sections will be uplifted� In this article,authors

given detailed information about democratized

governance, which will be an asset of the readers

to have insights on the concept and various

elements of democratic governance�

‘The Effect of MGNREGA on Social, Economic

and Political Empowerment of Women in Rural

Rajasthan, India’ in this article, Dr� Rajeev M� M� and

Dr� C� Vinodan emphasizes the effect of MGNREGS

on social, political and economic empowerment of

women in the rural areas of Rajasthan� The study

reveals that the better worksite facilities, proper

payment of wages, planning of works in phases and speedy grievance redressed will encourage women to demand more work under this scheme�Finally, Santosh Gupta, in his article titled ‘Making Agriculture a tool of Inclusive Growth’ (Economic Democracy)“Farmer’s Welfare: From Vision to Reality highlighted that the significance of the agriculture sector in rural employment is very high, he explains in his article� He argued that it is time for the inclusion and application of sustainable practices in the agricultural sector to bring about a progressive change� The government has initiated several programs and schemes for the betterment of Indian agriculture as already mentioned, though many times these initiatives could not reach the target population due to lack of knowledge amongst farmers concerning these policies� All chapters focus on the crucial role of the government in ensuring good and democratic governance with the effective participation of all stakeholders�

Next issue onward Book Review and special feature on socially-economically relevant civil society initiative would be part of the Journal�

While thanking for the overwhelming response for the first issue, we the editorial board look forward criticism and suggestions for further improvement�

7

Getting to Good Governance: Contemporary Discourse for Reinvention of Government

AbstractGood governance refers to the task of running the Government in an effective manner� Good Governance is not a phenomenon which can be described in words; it is rather a phenomenon which can be felt by people� According to U� N� Economic and Social Commission for Asia and the Pacific, Good Governance has eight characteristics: Participation, Strategic Vision, Rule of Law, Transparency, Responsiveness, Consensus Orientation, Equity Building, Effectiveness and Efficiency, Accountability� Good Governance is not an option of Government, but a basic right for all citizens and government is duty bound to provide it� The challenges of good governance would require government to be reinvented to function in a missionary, egalitarian and energised manner and bureaucracy to be re-positioned� In this context, the paper discusses Traditional Model of Public Administration, New Public Management Model, New Public Service Model, New Public Governance Model and Digital Governance�

Key Words: Good Governance, Government Reinvention, New Public Management, New Public Service, New Public Governance, Digital Governance.

1. IntroductionGovernment provides the framework for politics and involves the task of managing complex societies� Governance refers to the process

Pradeep V. Kamatpradeepvkamat@yahoo�co�in

of making collective decisions� The issue of governance has assumed importance because ‘good governance’ is crucial to development� The result of good governance is development that ‘gives priority to poor, advances the cause of women, sustains the environment, and creates needed opportunities for employment and other livelihoods’ (UNDP, 1997:1)�

Good governance often refers to task of running the Government in an effective manner� It is qualitatively and conceptually superior to a mere good government� The right to legitimate and accountable government, promotion of society where Rule of Law and fundamental human rights are respected, are all inherent to concept of good governance� For good governance, there should be government which is stable, truly representative of majority of people, which accelerates economic growth and development and ensures welfare of all sections of society� In this, transparency, openness and opportunity for public participation have emerged as important attributes of good governance� Governance is a package to strengthen institution of Government and civil society with objective of making governments more accountable, open and transparent, democratic and participatory�

UNDP identified three bases of good governance: Economic, participatory and administrative (UNDP, 1997)� Economic governance deals with sound


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decision-making processes within a country’s economic arena, which particularly focus on poverty reduction and equity promotion� Political governance deals with processes for formulation of policies for people of the country� Administrative governance deals with participatory process of policy implementation� Encompassing all three bases, good governance constructs processes and structures that ‘guide political and socioeconomic relationships’ (Barten et al� 2002:133)�

Good governance means, what is not bad governance (Morshed, 2007) or that level of goodness is high in governing processes (Besancon, 2003)� Good governance is characterised as reduced corruption, improved accountability, decentralised, well managed public resources, proper laws and equality, restructured civil services (Grindle, 2004)� Good Governance is not a phenomenon which can be described in words; it is rather a phenomenon which can be felt by people� Good governance does not depend only on executive but depends on efficient functioning of legislature, executive, judiciary, private institutions, NGOs, as well as co-operation of people�

Good governance is referred in many ways: better governance (Kaufmann, Kraay and Lobaton, 1999), democratic governance (Barten et al�, 2002), human governance (Aminuzzaman, 2006), welfare governance (Newman, 2007) and community governance (Sullivan, 2001)� Santiso (2001) broadly illustrated good governance, as a ‘quality’ of governance that focused on further requirements of process of decision-making and public policy formulation�

Minogue (1997:21) pointed good governance as a ‘reform strategy’ of governance, where that strategy was used to ‘strengthen the institutions of local society with the objective of making government more accountable, more open, transparent and more democratic’�

Good governance means executing coherent governing plan for the nation based on interests and priorities of people� The belief that every citizen is entitled to an equal say in conduct

of public affairs is heart of good governance (Narayan, 2000)� According to Mitra (2006) governance is high when people follow transaction rules� Rules are crucial to governance� Governance process encompasses both rule application and rule creation�

2. Features of Good Governance:U�N� Economic and Social Commission for Asia and the Pacific (UNESPACP) (2008:1) defined governance as ‘process of decision-making and process by which decisions are implemented (or not implemented)’� According to UNESPACP Good Governance has following characteristics: Participation, Strategic Vision, Rule of Law, Transparency, Responsiveness, Consensus Orientation, Equity Building, Effectiveness and Efficiency, Accountability� As no society has all these characteristics, each society should define characteristics most important to them� Good governance can be understood as set of eight major characteristics:

Participation � Participation by both men and women � Participation could be direct or through

intermediate institutions or representatives; � Participation means freedom of association,

expression and organised civil society�

Rule of Law � Good governance requires fair legal

frameworks that are enforced impartially � Full protection of human rights, particularly

those of minorities � Independent judiciary and an impartial and

incorruptible police force

Transparency � Decisions taken, and enforcement done in a

manner that follows rules and regulation; � Information is freely available and accessible

to all those affected by such decisions�

Responsivenessy � Institutions and process try to serve all

stakeholders within reasonable time frame


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Consensus Orientation � Need to reach broad consensus in society on

what is in best interest of whole community�

Equality and Inclusiveness � Ensuring that all members of society feel that

they have a stake and not feel excluded� � This requires all groups to have opportunities

to maintain or improve their well-being�

Effectiveness and Efficiency � Processes and institutions produce results

making best use of resources at their disposal� � It means sustainable use of natural resources

and protection of environment�

Accountability � Governmental institutions, private sector

and civil society organisations must be accountable to public and to their institutional stakeholders�

Good governance is not simply what government can achieve or do by itself� Good governance depends on co-operation and involvement of large number of organisations�

World Bank’s document (1992) “Governance and Development” states that “good governance is central to create and sustain an environment which fosters strong equitable development and its essential complement to sound economic policies�” The document identified three aspects of governance: form of political regimes; process by which authority is exercised in management of country’s economic and social resources; and

capacity of government to design, formulate and implement policies and discharge government functions� World Bank researchers mentioned six indicators that define a government as good or bad (Kaufmann, Kraay and Lobaton, 1999)� Hout (2002: 516) mentioned these indicators as follows:

� Voice and accountability: extent to which citizens of a country are able to participate in selection of governments;

� Political stability / lack of violence: likelihood that government in power will be destabilized or overthrown by possibly unconstitutional and violent means;

� Government effectiveness: quality of public service, quality of bureaucracy, competence of civil servants, independence of civil service from political pressures, credibility of government’s commitment to policies;

� Regulatory burden: incidence of market-unfriendly policies such as price controls or inadequate bank supervision, and the burdens imposed by excessive regulation in areas such as foreign trade and business development;

� Rule of law: extent to which agents have confidence in and abide by rules of society;

� Graft: extent to which public power is used for private gain or corruption�

International development agencies (IDAs) such as World Bank, United Nations Development Programs (UNDP) and Asian Development Bank (ADB) have identified number of basic components for good governance� Amongst these components four are common and universally recognized: accountability, participation, predictability, and transparency� By accountability it is understood that the governing authority would be answerable for its delivering of services� By participation the understanding is that local people and private sectors would be engaged with decision making processes� By predictability it is understood that, governing authority would make a decision implementable by following local laws and regulations� By transparency the understanding is that all information that affects people should be available to them (ADB, 2000)�


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Good Governance is not an option of the

Government, but a basic right for all citizens and

government is duty bound to provide it� Clean and

accountable government is a basic necessity� The

expectations and aspirations of citizens have risen

over years and today citizens demand best services�

There is need to focus more on initiatives that are

sustainable and can be scaled up� The challenges

of good governance would certainly require

government to be reinvented, bureaucracy to be

re-positioned, non-government business sectors

to re-invigorate with a social motive� A reinvented

government must have ethical consistency and

organizational flexibility to remain faithful to goal

of public service� For sake of good governance,

a reinvented government is to function in more

missionary, egalitarian and energized manner,

having less machine-like and less hierarchical

structure and procedures (Mukopadhyay, 1999)�

3. Traditional Model of Public Administration (PA)The key elements of Traditional Public

administration model (Hood, 1991) are:

� Dominance of “rule of law”; � Focus on administering set rules and

guidelines; � Central role for bureaucracy in making and

implementing policy; � “Politics–Administration” split within public

organizations; � Commitment to incremental budgeting; � Hegemony of professional in public service

delivery�

Model for reinvention of government through New Public Management (NPM)Model for reinvention of government has been

propagated by Osborne and Gaebler (1992)

1. Catalytic government: steering rather than

rowing

2. Community-owned government: empowering

rather than serving

3. Competitive government: injecting

competition into service delivery

4. Mission-driven government: transforming

rule-driven organizations

5. Results-oriented government: funding

outcomes, not inputs

6. Customer-driven government: meeting the

needs of the customer not their bureaucracy

7. Enterprising government rather than spending

8. Anticipatory government: prevention rather

than cure

9. Decentralized government: from hierarchy to

participation and teamwork

10. Market-oriented government: leveraging

change through the market

The following represent new paradigm of

reinventing government (Osborne and Gaebler,

1992; Barzeley, 1992)

� Serving public as ‘customer’; � Cutting unnecessary spending and eliminating

red-tape; � Training programmes to improve client or

customer service; � Quality improvement programmes to

empower employees and foster team work; � Benchmarks for measuring programme

outcomes or results; � Strategic planning that produces clear agency

mission statements; � Systems for measuring client or customer

satisfaction; � - Simplification and relaxation of human

resource rules; � - Privatisation of major programmes; � - Reduction in number of levels in agency

hierarchy; � - Decentralisation of decision making to lower

organisational levels; � - Greater discretion in procurement of goods

and supplies�

The key elements of the NPM can be summarized

as:


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� Attention to lessons from private-sector

management; � Growth both of “hands-on management” and

“arm’s length” organizations; � Focus upon entrepreneurial leadership within

public service organizations; � Emphasis on inputs and output control,

evaluation, performance management and

audit; � Disaggregation of public services to most

basic units and focus on cost management; � Growth of use of markets, competition,

contracts for resource allocation and service

delivery�

Entrepreneurial governments are catalytic,

competitive, mission driven, results oriented,

customer driven, and enterprising� Decentralisation

means empowering employees, pushing decisions

down from one level of government to another�

Community-owned government pushes control

out of bureaucracy and into the community�

Anticipatory government stresses prevention

rather than cure� Market-driven government

explores idea of changing markets rather than

using public programmes to solve problems� These

ten principles can be used to address problems

government and society face� The challenge for

leaders is how to restructure dysfunctional public

systems and make them effective again (Osborne,

1993)� Rather than focusing on controlling

bureaucracies and delivering services, public

administrators are responding to be entrepreneurs

of increasingly privatised government (Osborne

and Gaebler, 1992; Osborne and Plastrik, 1997)�

4. Model of New Public Service (NPS) Among criticisms of NPM model, was its emphasis

on people as “customers” or “clients” rather than

“citizens” and customers were placed as “end-

product” users of government rather than as

“means” of policy making process� Denhardt (2000)

presents the model of “New Public Service” (NPS)

a set of ideas about role of public administration

in governance system that places citizens at the

centre� Denhardt and Denhardt (2003:81) state “the public administrator is seen as a key actor within larger system of governance”�

(1) Serve citizens, not customers: The public interest results from dialogue about shared values, rather than aggregation of individual self-interests� Public servants do not just respond to demands of “customers,” but focus on building relations of trust and collaboration with citizens�

(2) Seek the public interest: Public administrators must contribute to building collective, shared notion of public interest� The goal is not to find quick solutions driven by individual choices, but creation of shared interests and responsibility�

(3) Value citizenship over entrepreneurship: Public interest is better advanced by public servants and citizens committed to making meaningful contributions to society rather than by entrepreneurial managers�

(4) Think strategically, act democratically: Policies and programs meeting public needs can be most effectively and responsibly achieved through collective efforts and collaborative processes�

(5) Recognise that accountability is not simple: Public servants should be attentive to statutory and constitutional law, community values, political norms and citizen interests�

(6) Serve rather than steer: An important role of public servant is to help citizens articulate and meet their shared interests, rather than to attempt to control or steer society in new directions�

(7) Value people, not just productivity: Public organisations and networks in which they participate are more likely to succeed in long run if they are operated through processes of collaboration and shared leadership based on respect for all people�

5. New Public Governance (NPG) Model NPG is a theoretical model in contradiction with NPM and PA by Osborne (2006; 2010):


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Loose Coupling:

This emphasises loose relationships between different units and groups inside the institutional system and is close to idea of network of actors and their relationship with each other�

Public Services understood as a Network of Actors:

Understanding service system as network of actors is also an important element� Rhodes (2007) defines networks as “Shared values and norms are the glue which holds complex set of relationships together; trust is essential for cooperative behaviour and existence of the network”�

Service-dominant logic:

The service-dominant logic refers to having wider perspective to public service system rather than conceptualising public services as processes, products, customers and clients� It emphasises service as dominant element of public administration�

Co-production:

Another perspective to see governance activities in public service is to use concept of interactive governance, which refers to governance as interactions, which aim at solving societal problems and creating societal opportunities�

Multifaceted accountability:

In model of NPG, accountability is understood as multifaceted� Hatem, Stenvall and Virtanen (2016) argue that in NPG, perspective of accountability considers service design and delivery as a process of continuous negotiation and co-production� Wider accountability includes ideas of accountability as social acceptance and concept of democratic accountability�

6. Framework for Monitoring and Improving GovernanceTo monitor governance - and to improve it – a framework is needed to cut through complexity�

Political leaders are prime drivers, setting objectives for governance system� Often they will work for

general interest; other times they cater to special interests and core supporters�

Check and balance institutions are important for sustainability of effective good governance� They include parliament, legislatures, independent oversight agencies, ombudsmen, judicial system, free press, accountable local governments�

Public bureaucracy is the implementing arm of government� It includes agencies that directly deliver social and regulatory services to citizens and organisations�

Citizens and Organisations are central to effective accountability� As users of services, citizens and organisations can hold providers accountable for efficiency and effectiveness of services�

7. Five Strands of Public GovernancePublic governance can be defined as the way state acquires and exercises authority to provide and manage public goods and services� It can be broken down into five distinct strands:

Socio-Political Governance, concerned with the over-arching institutional relationships within society� These relationships and interactions must be understood in totality�

� Public policy governance: concerned with how elites and networks interact to create and govern the public policy process�

� Administrative governance: concerned with effective application of PA and its repositioning to encompass complexities of contemporary state�


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� Contract governance: concerned with inner

workings of NPM and particularly governance

of contractual relationships in delivery of

public services� � Network governance: concerned with how “self-

organizing interorganizational networks”

function both with and without government to

provide public services�

‘Old Questions’ for assessing Public Governance to Good Public Governance

� How do we manage public policy

implementation to ensure that political will is

carried out in practice? (Policy implementation

question) � How do we ensure service performance?

(Audit and targets question) � How do we ensure that Public service

organization can work in partnership most

effectively? (Partnerships question) � How do we hold public managers accountable?

(Scrutiny question) � How do we “incentivize” staff for optimal

productivity? (Rewards question) � How do we ensure organizational

sustainability? (Change and innovation

question)

‘New Questions’ for Assessing Public Governance to Good Public Governance(i) What should be our basic unit of analysis in

exploring public policy implementation

and public services delivery and what are

implications of this for theory and practice?

(Fundamentals question)

� What are core the elements of service delivery

system and how do they inter-relate? � What are types of public service systems

and do they require differential governance

approach? � What is role of public service organizations

and networks in delivering public services?

(ii) What organizational architecture is best-suited

to delivering public services in plural state?

(Architectural question)

� What organizational architecture is best suited to deliver what sorts of public services?

� What are key contingencies of contemporary architecture of public service organizations and what are their implications for public services delivery?

� How do public service organizations develop organizational architecture that goes beyond simple organizational survival for successful delivery of public services to local communities?

(iii) How do we ensure sustainable public service systems and what does sustainability mean? (Sustainability question)

� What is sustainability? What are key dimensions of sustainability for public service delivery systems?

� To what extent is sustainability marginal or mainstream issue for public service organizations?

� How has concept and practice of sustainability evolved over the period of PA–NPM–NPG?

(iv) What values underpin public policy implementation and services delivery in such systems? (Values question)

� What values do public service managers and public service users hold and how can the potential contradictions between these be governed?

� Does co-production require a distinctive set of values to underpin public services delivery?

� What is impact of contested values within public service systems on delivery / use of services?

(v) What key skills are required for relational performance? (Relational skills question)

� What are core elements of relational performance?

� How do you identify, develop and sustain relational capital of a public service organization?

� What key competencies are needed for relational performance and how these be facilitated?


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(vi) What is nature of accountability in fragmented plural systems? (Accountability question)

� What is the focus of accountability? � How do you establish accountability in

fragmented public service delivery systems?

(vii) How do you evaluate sustainability, accountability and relational performance within open natural public service delivery systems? (Evaluation question)

� How do you evaluate performance of a multi-organisational service system, as opposed to a single organisation or service?

� Is it possible to evaluate outcomes which provide information that can be used in planning and management of public services?

� How do you actually evaluate sustainability of public services and public service organisations and their contribution to societal sustainability that allows transformational change in service?

� How do you integrate public values into performance evaluation so that issues such as equity and social justice can be part of judgment of service systems as well as economic performance?

The “new questions” must be addressed in order to drive forward evidence-influenced public policy implementation and public services delivery in the twenty-first century�

Digital Governance ModelIn July 2014, Organisation for Economic and Cooperation and Development member countries, adopted a Recommendation “that governments develop and implement digital government strategies” to assist them to achieve digital transformation� The Recommendation emphasises crucial contribution of digital technologies as strategic driver to create open, participatory and trustworthy public sectors, to improve social inclusiveness and government accountability and to bring together government and non-government actors and develop innovative approaches to contribute to national development and long-term sustainable growth� The context for adopting this

important Recommendation is that governments are looking for ways to respond to new and greater expectations of them from users to deliver more innovative and responsive services, address complex issues they face and in that context, use digital technologies to modernise their public services� A systematic and consistent approach to achieving sustained productivity improvements and more user-driven public services is required� The focus on digitisation of education, healthcare, and social care and protection services, including smarter use of well-proven assistive technologies is referred to as “digital welfare”� New approaches are needed to support shift from government-centred services to citizen-centred approaches where citizens and businesses determine their own needs and address them in partnership with governments, supported by new governance frameworks� The challenge is not to introduce digital technologies into public administrations (Digitisation); it is more transformative: to integrate use of digital technologies into public sector modernisation efforts (Digital Government) (Levy, 2007)�

Digitisation will play key role to leverage transformation of public sector, given its potential to increase productivity and inclusiveness of service production and delivery in public welfare areas� In short term, digitisation will be a precondition for establishing and maintaining sound fiscal policies; in longer run, it will be important to maintain public sector’s credibility in terms of efficient and effective delivery of high quality services that are shaped by and responsive to users’ needs, thus nurturing public trust in governments’ capacity to boost more inclusive processes and growth� There are two important elements to digitisation� Firstly, nature of Information and Communication Technologies involved and secondly, services and activities of government in which digitisation may have a role� Regarding first, digitisation involves greater use by governments of digital technologies with focus on improving efficiency and productivity in service delivery� Digitisation reflects a government-centred approach, where governments are focused


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on changing delivery methods to reduce costs, in relation to administrative services or direct personal services with standardised processes� The second element is public services, which cover both “administrative services” and “direct personal services”� Administrative services are those functions of governments that are critical to public sector’s existence, such as the identification of individuals as citizens, public security and safety and procedural matters relating to operation of government� Direct personal services are services delivered to collective or individual users that address personal needs of individuals, relating to well-being and social and economic development� The final stage in digital transformation path is ‘Digital Government’, enabling governments to create increased public value and public sector modernisation through integration of digital technologies and user preferences in service design and delivery of direct personal services and in shaping public policy outcomes, also attaining efficiency and productivity gains (Levy, 2007)�

8. Important implications for design of Public Governance Reform:1. Be aware of relationship between political

economy and policy design:

� Reform design and strategies must take into account interests of reform implementers�

� Quality of analysis underlying reform can affect adoption and implementation�

2. Be aware of technical complexity of public governance reform:

� Critical success factors are unknown due to scope, scale and complexity�

� Structures of governance are rooted in political compromises that can be fundamental�

3. Be aware of perception of reform and reform setup when reforming:

� It is difficult to raise citizen awareness of need for change�

� Initiators’ perception of political support for reform has direct impact on implementation�

4. Be aware that reform is a long process with setbacks and few successes in beginning:

� Major structural reforms are rarely successful at first attempts�

� Reforms do not have to be perfect to be successful�

EpilogueGood Governance is not an option of Government� It is basic right of all citizens and government is bound to provide it� Good governance can be a reality, provided every organ of Government works meticulously and with integrity� This reality would increase through active support and participation of people in all tasks of Government� Government has to encourage people to participate in Governance� A new world is emerging, which wants governance and delivery� 4 Es are integral to Good Governance: Efficient, Effective, Easy, Economical Governance� This would promote democratic administration which is sine-quo-non for good governance�

References:1� Aminuzzaman, S�M� (2006)� Governance and

Development: an Overview� In S�M� Aminuzzaman

(ed�), Governance and Development: Bangladesh and

Regional Experiences, 1st edition, Shrabon Prokashani,

Dhaka, pp� 11-32�

2� Barten, F�, Montiel, R� P�, Espinoza, E� and Morales,

C� (2002)� Democratic Governance - Fairytale or

Real Perspective? Lessons from Central America�

Environment and Urbanization, 14 (1), pp� 129-44�

3� Barzelay, M� (1992)� Breaking through Bureaucracy�

Berkeley, CA: University of California Press�

4� Besancon, M� (2003)� Good Governance Ranking: the

Art of Measurements� World Bank, WPF Reports, no�

36�

5� Denhardt, R� B� and Denhardt, J� V� (2000)� The New

Public Service: Serving rather than Steering� Public

Administration Review� 60(6), pp� 549-559�

6� Denhardt, J� V�, and Denhardt, R� B� (2003)� The New

Public Service: Serving, not Steering� Armonk, N� Y: M�

E� Sharpe�

7� Grindle, M� S� (2004)�Good Enough Governance:

Poverty Reduction and Reform in Developing


16

Countries� Governance: An International Journal of

Policy, Administration, and Institutions, 17 (4), pp�

525- 548�

8� Hatem, O�, Virtanen, P�, and Stenvall, J� (2016)� Do

accountabilities change when public organisations

transform to service systems? Financial Accountability

and Management� 12�9�2016�

9� Hood, C� (1991)� A Public Management for All Seasons�

Public Management, 69 (1)�

10� Hout, W� (2002)� Good Governance and Aid: Selectivity

Criteria in Development Assistance� Development and

Change, 33 (3), pp� 511- 527�

11� Kaufmann, D�, Kraay, A� and Lobaton, P�Z� (1999)�

Governance Matters� Washington, DC: The World

Bank�

12� Levy, B� (2007)� Governance Reform – Bridging

Monitoring and Action� Washington, DC: The World

Bank�

13� Minogue, M� (1997)� The Principles and Practices of

Good Governance� Institute for Development Policy

and Management, British Council, University of

Manchester�

14� Mitra, S�K� (2006)� The Puzzle of India’s Governance

- Culture, Context and Comparative Theory� Oxon�:

Routledge�

15� Morshed, M�M�R� (2007)� Essays on Capacity Building:

Human and Institutional Aspects� Dhaka: Bangladesh

Civil Service Administration Academy�

16� Mukhopadhyay, A� (1998)� Reinventing Government

for Good Governance, Indian Journal of Public

Administration, 64 (3)�

17� Narayan, D� (2000)� Voices of the Poor: Can Anyone

Hear Us? New York: Oxford University Press for the

World Bank�

18� Newman, J� (2007)� The “Double Dynamics” of

Activation Institutions, Citizens and the Remaking

of Welfare Governance� International Journal of

Sociology and Social Policy, 27 (9/10), pp� 364-75�

19� Osborne, D� (1993)� Reinventing Government� Public

Productivity and Management Review, 16(4), pp� 349

-356�

20� Osborne D� and Gaebler, T� (1992)� Reinventing

Government: How the Entrepreneural Spirit is

Transforming the Public Sector Schoolhouse to State

House� MA: Addison-Wesley�

21� Osborne, D� and Plastrik, P� (1997)� Banishing

Bureaucracy� Reading, MA: Addison-Wesley�

22� Rhodes, R� (1997)� Understanding of Governance: Policy

Networks, Governance Reflexivity and Accountability�

Open University Press�

23� Salamon, L� (2002)� The Tools of Government: A Guide

to the New Governance� New York: Oxford University

Press�

24� Santiso, C� (2001)� Good Governance and Aid

Effectiveness: The World Bank and Conditionality, The

Georgetown Public Policy Review, 7 (1), pp� 1-22�

25� Shukla, S� (2010)� The Concept of Good Governance:

The Indian Context� In R� Sharma and R�K� Arora (Eds�)

Good Governance: Stimuli and Strategies, pp� 39 – 51�

Jaipur: Alekh Publishers�

26� Sullivan, H� (2001)� Modernisation, Democratisation

and Community Governance, Local Government

Studies, 27(3), pp� 1-24�

27� Tornquist, O� (1999)� Politics and Development – A

Critical Introduction� London: Sage Publications�

28� UNDP (1997)� Reconceptualising Governance� p�iv�

29� World Bank (1992)� Governance and Development�

Washington, DC: The World Bank�

17

Prof. Rajiv Gupterajivgupte1@rediffmail�com

Governance of Institutions as Complex Adaptive Systems

Abstract“You cannot march through 21st century using 19th century tools� The world is even more interconnected and interdependent” opines P�M� Narendra Modi (Aug� 2016)� In Jan� 2019, the P�M� talked about policy driven governance and predictable transparent policies� This paper deals with these two aspects� Despite the fact that the world is getting increasingly interconnected by flows of international trade and technology, many perceive human decision making and institution building to be fragmented, poorly coordinated and inapt in dealing with complexity (Berkes et al�2006; young et al� 2006)� Governance in this type of complex set up is therefore not top – down but Bottom – up decision making� (John Pam 2018)� Governance therefore is about the rules of collective decision making in settings where there are plurality of actors or organizations and where no formal control system can dictate the terms of relationship between the actors and organization (Chhotray, Stokes 2009)� This article reviews the various comments and observations related to the practice of governance and its various elements�

Keywords: governance, institution building, collective decision making

Complexity deals with behavior of a system whose components interacts in a multiple way and follow local rules, meaning there is no reasonable higher instructions to define various higher instructions to define various possible interactions� This is

a higher order of emergence greater than the sum of its parts� Processes, such as climate change, technological innovations, the spread of pandemic diseases and rapid fluctuations in world markets, all challenge a linear, scale free and state way of governance (Duit, Galaz 2008)� Such processes have immense impact on present and future institutions (Hall, 2003) It is known that, in structured governance systems, the growth is linear, whereas in less structures (system) the growth is nonlinear� Such (system) grow slowly initially, but have a fat tail� Baumgartner and jones (2002) and Repetto (2006) have studied punctuations and positive and negative feedback imbedded in the policy process� Perrow (2004) provides a detailed elaboration of the genetics of complex systems and the type of organizations able to cope with their associated risks�

This means, the system not only is uncertain but also unpredictable� Besides due to non- linearity, there is Lorenz’ effect, which we have been witnessing from Financial Crisis in 2008 to global climate change� This is particularly true in case of governance of institutions, as they are multilayered� Signs of increasing fragmentation of institutional landscapes include decentralization of governmental authority, growth of public – private partnership arrangements, and augmented influence of non-governmental organization on policy processes at a number of political level

18

(Pierre & Peters, 2005)� This necessitates bottoms

up governance, rather than Top – down governance�

These developments, together with a growing

impact of multilateral agreements on domestic

policy and spread of policy innovations for our

ability to deal with both rapid and incremental

change (Biermann 2007; duit and Gulaz 2008;

Galaz et al 2008)�

Thus, in decentralized, hierarchic systems,

“Governance in about the rules of collective

decisions working in settings where there are

a plurality of actors or organisations and where

no formal control system can dictate the terms

of relationships between those actors and

organisations (Chhotray and Stokes 2009)� Thus

there are large number of interacting forces,

rather than small number of controlling forces

(Holling 2001)� The advantages of hierarchical co

– ordination and governance in lost in a world that

is characterized by increasingly dense, extended

and rapidly changing patterns of reciprocal

interdependence and interactions across all types

of pre- established boundaries, intra and inter

sectorial, intra and international� (Scharf 1994)�

This requires hierarchic rather than hierarchic

models� This requires rapid charge and adaption�

Evolution of complex systems, especially with

information technology’s networking potential,

lead to a spiral growth partern�(Lindstone and

Milttoff, 2006)

Decentralization

Toward

chaos

Toward

order

Decentralization

Toward

chaos

Separation

Differentiation

Toward

order

Combination

Integration

This begins with an elementary system, moving

through a process of combination or integration to

a more complex system, which in turn grows until

its structure demands differential or separation, followed by recombination at the higher level�

Here, the institution oscillates between high centralization to high decentralization�

Second issue is, “move fast and break things” is the now infamous mantra associated with Silicon Valley� It is an approach that prioritized speed of creation, even if mistakes are made on that dizzy path� As it turned out their blunders were to have a serious impact on society, elections and democracy globally� Therefore, such trap needs to be avoided�

At times of phase transitions of the institutions, qualitative disturbance leading to chaotic effects as characterized by sand pile model to be avoided� Institutions need adaptive capacity� There are three properties that shape the adaptive cycle and future set of a system (Holling 2001)

1. Inherent potential of a system that is available for change, we call this wealth� There are future options

2. Internal controllability of the system that is the degree of corrected ness between internal controlling variables and processes, this reflects flexibility and rigidity of the system�

3. Adaptive capacity that is the resilience of the system, measure of vulnerability to unexpected or unpredictable shocks� This property id opposite to vulnerability of the system�

Thus wealth controllability and adaptive capacity�

Wealth sets limits to what is possible – it determines the number of alternative options for the future� Corrected ness or controllability determines the degree to which the system can control its own destiny, as district from being caught in the whims of external variability� Resilience as achieved by adaptive capacity, determines how vulnerable the system in to unexpected disturbances and surprises that can exceed or break that control�

Exploration and exploitation both needs to be ensure if the system has to thrive on the edge of chaos�


19

On evolutionary path of institution the trajectory

alternates between long periods of slow

accumulation and transformation of resources

(from exploitation to conservation or r to K)

with shorter periods that create opportunities

for innovation (from release to reorganization

or Ω to a) That potential includes accumulated

capital as well as unexpected chance mutations

and inventions� During the slow sequence from

exploitation to conservation connected ness and

stability increases and capital is accumulated� For

institution, the accumulated capital derives from

skills networks of human relation, knowledge

that are developed incrementally and integrated

during r to k� As systems connect ness increases,

eventually becoming over connected and

increasingly rigid in its control� The actual change

is triggered by agents of disturbance (Hurst and

Zimmerman 1994; Holling et al 2001)

The phase from Ω to a is a period of rapid re-

organisation during which, if managed purely

can lead to innovations� Initially the front loop

of r to k becomes progressively more predictable

as it develops. In contrast, back loop of Ω to a

is inherently more unpredictable and highly

uncertain� This is the time accumulated innovations

offer opportunities� Thus, one objective being

maximizing production and accumulation, while

second is maximizing invention and reassortment�

Here is Resilience, the third dimension� As the

phases of adaptive cycle proceeds, the systems

resilience expands and contracts� The conditions

that foster experimentation occur during periods

in the back loop of the cycle� When controlling is

low and resilience is high (a phase) low connected

ness (weak control) permits reassortments of

elements that were previously tightly connected

to others� High resilience nets tests of novel

combinations because the costs of failure are low�

In a nutshell,

1. Wealth increases incrementally with increase

efficiency but increased rigidity(r to k)

2. As wealth increases, slow changes gradually

expose an increased vulnerability� The

trajectory may move abruptly from k to Ω

3. Innovations occur when uncertainty is great

wealth is high and controls are weak i�e� a

4. The innovations are then tested some fail but

other survive and adapt in a succeeding phase

of growth from r to k�

These cycles may exist at different phases at the

same time in different levels� Institutions can have

punctuated equilibria�

Thus,(a) Tightly coupled organizations are unlikely to

survive by adaptation as

� Change in one attribute causes impact on

many other


20

� Better to make “long jumping” in dynamic

landscapes

(b) Loosely coupled organisations survive in

� Adapting quickly � Making few long jumps

Therefore, it is imminent that, institutions need to

be built around adaptive capacity and capability

building�

(c) Adaptive capacity & different types of complex

change

By allowing the interaction effects between

different governance systems nested within each

other i�e� multilevel governance systems adaptive

cycles can be affected (cash al 2006; Young 2006)�

Concepts such as ‘institutional redundancy and

‘polycentric institution’ (McGinnis 2000) are based

on interplay between institutions on different

social levels� Combination of governance systems on different levels can produce cross –scale interaction effects (Tsai 2006)

Therefore, to understand co-evolution we discuss Fischer’s Fundamental Theorem

1. There is no cardinal: That is, there is a lot of variation between species, in this case institutions

2. Rugged Landscape (NK Theory): Landscape is constantly dancing and it is advisable to develop strategies to lead to Global optima rather than local optima�

3. Replicator Dynamics: Firms would copy those firms which are more ‘Fit’ Greater the variation more the fitness�

Thus, it is appropriate to develop co-evolution of institution�

If a 70 years old Public sector organization manufacturing Defense equipment and 1,00,000Cr� Orders in pipeline require 2�7 times more man hrs� than others and 53 waivers can deliver 8 instead of 43 fighters as desired� It would be ideal to lead it to the path of co-evolution by forging more strategic alliances and joint venture organizations� This can built capacity, free the institution from rigidity, infuse innovations, not only technologically but also managerial and leverage the accumulated wealth� It is a welcome move to free 111 defense items from license list, but better co – ordination amongst various agencies need to be ensured�

The approach needs to be ecosystem development�

At the end, here are a few illustrations using Netlogo agent based simulation to manage complexity in the system:

1. Urban transport :

Three governance scenarios exist:

(a) Soft control: via road pricing, limited in space and time

(b) Strong control: via spatial and temporal can bans

(c) Combination of soft and strong


21

Result: Reference scenario, strong control and combination control remain constant after 8000 ticks, but productivity of soft control is the highest

2. Educational system: Using Forest Five model:

(a) Fixed, homologues rules: Extreme standardization of curriculum

(b) Homogenous adaptation; offering part elections

(c) Heterogonous adaption: offering super specialization

(d) Omniscient closure: Multidiscipline elective based curriculum

Result: The forth approach is most productive� A combination could lead to ecosystem development�

3. The above model can also be used to determine bank as well where each tree is analogs to a

risky loan and topology of forest are connections

between banks, lightning strikes represent bank

defaults and cascading five is the cascading affect

resulting in bank failure�

4. Simulating demography in J & K, using Schelling’s

segregation model, both sorting and peer model

we have reached exodus tip� The segregation index

in last 20 yrs has reached 92�6% from 68%

Conclusion:1. Recognise Govt� institution as complex systems

2. To affect adaptive cycles ensuring productivity

and resilience foster co-evolution through

joint – ventures� Public – Private partnerships

and strategic alliances both intra &

International� Synergy and appropriative must

be the criteria� Met govern the institutions with

logical informed decisions through available

postmodern tools�

3. Responsive multilevel governance: For

climate change, more power and funds to

municipalities through decentralization;

and environmental regulator requires more

centralization�

4. Develop ecosystem and skill train manpower

for sustainability

5. Please note that, extreme caution must be

exercised in prioritizing and understanding at

which stage of adoptive cycle the institution

in�

6. While implementing due to uncertainty,

incrementalisation and experimentation

should be considered� Also, due to non-

linearity and inter corrected ness, any change

is even one variable, could have profound

impact on the system as a whole� After all, we

are not dealing with an isolated, mechanical

system� Sensitivity is the key�


22

References1� Miller H� J�, Page Scott, Complex Adaptive systems�

Prinston University Press, 2007�

2� Holling C� S�, Understanding the complexity,

Ecosystems, 2001�

3� Duit, Andres, Gulaz Victor� Governance and

Complexity� Stockholm University Press� 2008�

4� Duit, Gulaz� Governance� Complexity and resilience�

Global Environment change, 2010�

5� Adell, Weyer, Hoffman� Simulation of Governance of

complex system� 2007�

6� John, Palm� Complex Adaptive Blockchain Governance

of complex system� 2017�

7� Janssen, Manco� Resilience and adaptation

in Governance� International Journal of the

commons�2011�

8� Robert Jessop� Governance, Governance failure and

Metagovernance� Lancaster University� 2003�

9� George, Modelski� Globalisation as Evolutionary

process� Teyllor & Francis� 2008�

23

Dr. Krishna DevIndependent Consultant

E-mail: kd�krishnadev@gmail�com

Housing for all: A Basic Need with Governance

A roof over one’s head is a dream the every human being aspires for� Shelter and housing at one time was never an issue in the Indian

context especially in the rural areas� The joint family system meant that there was one house for the entire family and all the family members lived in the family home� The trend of migration to city for job first raised the issue of house for a family�

Rising concentration of people in urban areas also resulted in an increase in the number of people living in slums and squatter settlements� According to 2011 census, the urban population of India increased by 91 million over a period of 10 years� The census projected housing shortage at 18�78 million in the beginning of 2012 with majority of it coming from economically weaker section (EWS) or Low Income Group (LIG)�

Affordable housing has, thus, become one of the biggest challenges of the present times� Planning for a home has become imperative for the younger generation today who are forced to begin their career with the quest for a permanent home for themselves� Ever rising rents, fleecing builders, unapproved land use, substandard building material etc� have all widened the gap between supply and demand�

Most of the major cities viz� Ahmedabad, Bangkok, Buenos Aires, Cape Town, Delhi, Dhaka, Manila, Mexico City, Mumbai, Nairobi etc� all in hot countries not too far from then equator, full of bustling humanity and hubbub of people and

machines, rich with the complex aromas of food and perfumes as well as pollution and decay�

These fast-growing cities share a common element which is informal settlements and also called barrios, favelas, shanty towns, slums, or self-made cities� These settlements lack many basic services, but they are also places where people are creating ingenious solutions to the problems they face, collaborating and designing (settlement) in unexpected ways to make something from almost nothing�1

Almost one billion people already live in informal settlements around the world, and this population is expected to double in the next twenty years as people continue to move to the cities in search of work and opportunity�

As cities have become the world’s central places for people to live and some of the poorer parts of the globe, they are growing faster than ever before� This urbanization is due not only to overall population growth, but because cities are now seen as providing the only possible opportunity to emerge from poverty and some a path to a full economic and social life� There is no more important design challenge today than the need to create sustainable means of survival for these urban poor�2

1 Cynthia E� Smith et al�, ‘Design with the Other 90% Cities’, Copper Hewitt, National Design Museum, Smithsonian Institution, New York, NY 10128, USA, 2011� pg�4�

2 Ibid� pg�8�


24

The United Nations (UN) Habitat Programme defines informal settlements as residential areas where a group of housing units has been constructed on land to which the occupants have no legal claim, or which they occupy illegally; or unplanned settlements and areas where housing is not in compliance with current planning and building regulations (unauthorised housing)�3

The UN-Habitat has also developed a definition of a slum household in order to use existing household-level surveys and census to identify slum dwellers among the urban population� A slum household is defined as one which lacks any one of the following five elements:4

1. access to sufficient water: for family use, at an affordable price, available without extreme effort,

2. access to sanitation: access to an extra-disposal system, either a private toilet or a public toilet shared with a reasonable number of people,

3. security of tenure: documentation to prove secure tenure status or de facto/perceived protection from evictions,

4. durability of housing: permanent, adequate structure in nonhazardous location, and

5. Sufficient living area: no more than two people sharing the same room�

Housing is a basic necessity as well as a part of the construction industry and important sector of the economy� The construction sector contributes towards 8 percent of the Indian GDP (at constant prices) and second largest employer and contributor to economic activity, after agriculture sector� The construction sector accounts for second highest inflow of foreign direct investment (FDI) after the services sector and employs more than 35 million people, considering the direct, indirect, and induced effects in all sectors of the economy�5

3 Ibid pg.14

4 Ibid. pg.15.

5 http://www.makeinindia.com/sector/construction

The former UN-Habitat Executive Director Anna Kajumulo Tibaijuka stated that “urban inequality has a direct impact on all aspects of human development including health, nutrition, gender and education�” The largest slum in entire South and South East Asia in Dharavi, Mumbai is often referred to as “a city within a city�” It was a fishing village in the 1960s, and was transformed into a diverse slum of migrants with a vibrant informal economy of globalised exports�

In Urban Revolution, Jeb Brugman describes Dharavi as an “engine of urban poverty reduction” for several reasons i�e� high density, low transportation costs, since most workers in Dharavi also live there; high property usage, as buildings are used twenty-four hours a day for housing and workshops� Moreover, manufacturer suppliers and retailers are next door to each other and there is a strong migrant affiliation within micro-industries� Once outside the city, Dharavi is now situated on valuable land as the formal city expanded around it� Families face eviction, either to the periphery of Mumbai or to alternative housing they cannot afford, where they confront a new poverty, moved far from their means of livelihood, where the cost of living outpaces any potential benefits�6

Cities are centres of wealth� The per capita income of some of the largest cities is much higher than the average per capita income of the country as a whole and, in some cases more than double the national average but they are also intertwined with the national and rural economy through consumption patterns, remittances, and other links�

The housing industry is one of the fastest growing sector in India� With a large population base, rising income level and rapid urbanisation leads to growth in this sector� In 2001, about 286 million were living in urban areas across India� It had the second largest urban population in the world� 7

6 Ibid. Cynthia E. Smith et al. pg. 17-18.

7 Make In India.


25

As per the census 2011, the urban population had increased to 377 million thereby registering a growth of around 32 percent�8 The housing shortage in rural India is estimated at 47�4 Million units, in 2012� As per the estimates, nearly 590 million people will live in Indian cities by 2030� With this population, India has an estimated urban housing shortage of 18�8 Million dwelling units�9

This will be a significant population for which mobility services need to be thought through� The demand for urban transport in newly-growing areas and now smaller cities also will need significant attention so that urban transport in these locations don’t reach crisis proportions before they are addressed� The approach to small and medium towns and large rural areas cannot be the same as for metropolitan cities and while their demands and problems are also significant urban planners should not look at them with the peculiar lens out of their understanding of mega cities alone�

In 2001, there were 5,161 towns in India which increased to 7,935 towns by 2011� The total urban population living in cities and towns in any particular class has increased consistently due to the urbanisation throughout the last century� This urban growth pattern has led to increasingly larger proportions of population living in Class I towns� Over two-thirds of the total urban population now lives in cities that have populations over 100,000 (Class I towns)� The continuing increase in the number of large cities, million-plus cities, half-million-plus cities, and 100,000-plus cities does have implications for strategies for urban transport management�

The public housing programme in the country started with the rehabilitation of refugees immediately after the independence and since then it has been a major focus area of the government as an instrument of poverty alleviation� 10

8 Census of India 2011.

9 Make In India.

10 Ministry of Rural Development. Available at: pmagy.nic.in/netiay/English_Book_Fonal.pdf

The Government has formulated many policies to resolve these issues for housing and urban service delivery� The first attempt at setting urban service norms and standards was made in 1963 by the Zakaria Committee� Subsequently, other government committees/agencies/institutions like the Town and Country Planning Organisation (1974), Planning Commission (1983, 1999), Operations Research Group (1989), Ministry of Urban Development, Government of India (1991), Central Public Health and Environmental Engineering Organisation (1999), Ishar Judge Ahluwalia Committee on Indian Urban Infrastructure and Services (2011), National Urban Transport Policy (2006) and state governments have come up with norms for different services� The National Housing Policy of 1988�

Additionally, many bodies like the National Housing Bank (NHB) and Housing & Urban Development Corporation (HUDCO) had also been created to facilitate the implementation of such policies� The first policy specific to urban housing was the National Urban Housing and Habitat policy in 2007 (Ministry of Housing and Urban Poverty Alleviation, 2007)� It focused on affordable housing as a key objective for sustainable urban development� Following this, many programmes specific to affordable housing have since been incorporated as:

� Jawaharlal Nehru National Urban Renewal Mission (JNNURM): It aimed to construct 1�5 Million houses for the urban poor in the mission period (2005-2012) in the 65 mission cities� Two policies under JNNURM targeted housing� Integrated Housing and Slum Redevelopment Programme is a direct housing policy measure� Basic Services for the Urban Poor (BSUP) aims at providing entitlements such as security of tenure, affordable housing, and services such as water, sanitation, health and education and social security to low-income segments

� Affordable Housing in Partnership (AHP): A market solution based approach by involving private players�

� Rajiv Awas Yojana: This programme aimed at providing affordable housing to the urban poor�


26

� On May 2015, Rajiv Awas Yojana (RAY) was rolled over into the Housing for All (HFA) by 2022 policy� This report analyses the RAY and HFA 2022 policies after developing a framework for sustainable policies for addressing the problem of affordable housing�

Recently in the Budget 2018-19, the government also established a dedicated Affordable Housing Fund (AHF) in National Housing Bank, funded from priority sector lending shortfall and fully serviced bonds authorised by the Government of India�

The Prime Minister envisioned Housing for All by 2022 when the Nation will complete 75 years of its Independence� In order to achieve this objective, Central Government has launched a comprehensive mission “Housing for All by 2022”�11 The scheme comes with an aim of constructing more than two crore houses across the length and breadth of the nation within a span of next seven years (2015-2022)� The scheme known as Pradhan Mantri Awas Yojana (PMAY) will be implemented as Centrally Sponsored Scheme (CSS)�12

The target beneficiaries of the scheme would be poor and people living under EWS and LIG categories in urban establishments of the country in 4041 statutory towns as per Census 2011 with focus on 500 Class I cities would be covered and carried out in three substantial phases as follows:

PMAY Phase I: The Phase-I (April 2015 to March 2017), a total of 100 cities would see the developmental work started and completed during this phase�

PMAY Phase II: The Phase-II (April 2017 to March 2019), a total of 200 more cities would be covered and developed�

PMAY III: The Phase-III (April 2019 to March 2022), during this phase the left over cities would be covered and developed� 13

In the Budget 2018, persons belonging to poor and middle class are also being provided a great

11 http://pmaymis.gov.in/PDF/HFA_Guidelines/hfa_Guidelines.pdf

12 Ibid. 11.

13 Ibid 11.

relief in interest rates on housing schemes� An allocation is also increase to Rs� 27505 for the year 2018-19 from Rs� 29013 crore in 2017-18�14 It is an increase of 5�5% from the last years Revised Estimates�

The last year, the Budget 2017 proposed infrastructure status for this affordable housing, a long-standing demand of developers, and also increased the allocation for the PMAY from Rs 20,075 crore to Rs 29,043 crore, bringing the country closer to realising the Housing for All mission by 2022�15 Granting infrastructure status to affordable housing was significant as it will provide cheaper sources of finance to developers and also open up additional avenues for developers to raise funds�

In the Budget 2015, the government has also committed to provide 6o million houses� It has also committed to invest about 61 billion USD by 2019 to make affordable houses available� However, the total estimated investment requirement would be about 1 trillion USD, 70%-80% of which would be in the affordable segment over the next five to seven years�16 To meet these funding needs, the government is also proactively working on attracting private sector investment in the development of the housing sector� One crore houses are also to be built by 2019 in rural India for the homeless and those living in ‘kaccha’ houses�

With the huge target of the scheme, it is revealing that in the coming year the boom would be take place in the construction and real estate sector� A huge investment would also be made in this sector� This investment would also give an incredible growth to the economy� This growth will create multiple opportunities in the cities�

It is evident in the Indian scenario that the opportunities are only and will available in the cities� As Ed Glacser puts it, “cities don’t make

14 Budget Speech 2018-19.

15 Budget Document 2017-18.

16 Budget Document 2015-16.


27

poor people; cities attract poor people”�17 This attraction is nothing but migration� Migrants face difficulties in accessing housing and other basic amenities such as water and sanitation and transportation� In many cases, work is usually in sectors like construction, where work availability is intermittent and workers remain under-employed� As such, workers tend to live in miserable conditions and are exposed to harassment� They, especially shorter term migrants, are often forced to live in urban slums, facing constant threats of displacement and eviction� Many live in footpaths and city parks without provision of basic services and subject to harassment, especially for women�

Not only do such cities attract more migrants to work in the growing enterprises, the lack of an adequate housing response means that most of these migrants are in informal settlements, such as unauthorized colonies, if not slums� The very diversity of the population the interwoven webs of social networks and matrix communities creates more possibilities for livelihood per square kilometre for any single individual than they might have otherwise�18

The major challenges market faces on supply and demand side of housing and urban infrastructure are:

� Complex and lengthy processes for pre-implementation stage: this shall include land conversions, building plan scrutiny and approvals, obtaining construction permits and other long list of no objection certificate (NOCs) from various agencies/departments� This can take about two years and vary significantly from state-to-state, impacting project cost and time, thereby making it unviable to provide housing at costs affordable to the urban poor�

� Lack of adequate external infrastructure and connectivity: some of the state governments have taken note of these issues and have proactively taken steps to simplify and streamline policies and processes—for

17 Ibid. Cynthia E. Smith et al. pg. 6

18 Working Group Report on Migration

instance, the land pooling scheme and re-densification scheme in Madhya Pradesh, GPS-based Physical Progress Monitoring System in Karnataka and so on�

As progress with the housing for all by 2022, if completed in the time bound manner we really need to keep in mind the above target and to make emphasised on the various important infrastructural issues viz water, sanitation & health, transport, education, power and environment to live in a good and sustainable condition to make sure that in the future these housing societies may not turn into a mess and not give any opportunity in the future to rise of slums and environmental and health hazards in their surroundings�

1 Water, Sanitation & Health:Inadequate coverage, intermittent supplies, low pressure, and poor quality are some of the most prominent features of water supply in the cities of India� With rapid increase in urban population and continuing expansion of city limits, the challenge of delivering water in Indian cities is growing rapidly�

Pollution of water, air, and land has contributed greatly to the proliferation of disease, e�g� dengue, malaria, chikungunya, swine flu, diarrhoea, asthma, and acute respiratory infections� A study by the Ministry of Urban Development, Government of India (2009) finds that 23 million children below the age of 14 in urban India are at risk from poor sanitation�19 The same study finds that 8 million children in urban areas are at risk from poor water supply� Infant mortality at 42 deaths per 1000 live births, though lower than in rural areas, continues to be unacceptably high�20

Water supply is inadequate, poor maintenance and inadequate replacement lead to technical losses in the distribution network�21 Errors in metering, un-billed water consumption, and plain theft contribute to commercial losses� All this

19 Ministry of Urban Development, GoI.

20 Report on Indian Urban Infrastructure and Services. pg.46.

21 Ibid.


28

leads to high levels of non-revenue water� With no monitoring system in place and no incentive to reduce inefficiencies, the urban water scenario in India is one of poor service delivery, poor maintenance of physical systems, poor recovery of costs, and poor generation of revenues�

In addition, the most common natural threats to the cities are related to flooding, erosion and water pollution and the provision and management of water will become more and more pivotal� It is very important ensure the potable drinking water to the existing and future houses� It is evident that large scale centralised engineering projects have historically done more harm than good� Alternative decentralised urban water management has to be tested�

Sewage service should keep their network free of obstruction and leakages and treat the entire volume of waste collection in a manner that preserves waterways, water sources and the environment as a whole� The situation in India is unfortunately far from ideal� The extent of water supply and sanitation facilities is grocery inadequate and even in those areas which are served water supply is intermittent and often poor quality, resulting in negative health impacts� It is to mention that:

� 4861 out of the 5161 cities/towns in India do not have even a partial sewerage network

� Almost 50 per cent of households in cities like Bangalore and Hyderabad do not have sewerage connections

� About 18 per cent of urban households do not have access to any form of latrine facility and defecate in the open

� Less than 20 per cent of the road network is covered by storm water drains�22

For the futuristic demand of fresh water or drinking water or water for the industrial uses will go up with the growing cities� The production of waste water which is deposed, largely untreated into already limited fresh water resources thereby further exacerbating scarcity condition� In this

22 Ibid. pg.51

scenario it is important to increase the water treatment plants for the drinking water as well as for the industrial use� It is estimated that the lack of waste water treatment leads to over $15 billion spent in treating water-borne diseases in India (CII and CEEW 2010)� Also, to focus on the drainage system, availability of latrine facilities etc�

Solid Waste Management: The management and disposal of solid waste generated in Indian cities leaves a great deal to be desired, although the generation of solid waste is at much lower rates than in most countries� Neither households nor municipalities in India practise segregation of biodegradable waste from the rest, and public awareness on the benefits of segregation is low� The collection of the garbage from dumpsites is infrequent, processing is not done in most cases, and disposal rules are followed more in the breach� The Municipal Solid Waste Rules were put in place in 2000 but their enforcement has been poor�

The fact that a large part (over 60 per cent) of India’s waste is biodegradable, provides an opportunity for composting� While lifestyle changes, especially in the larger cities, are leading to increased use of packaging material, and per capita waste generation is increasing at about 1�3 per cent per annum, the biodegradable component is still expected to be much higher than in industrialised countries�23 The government of India has launched the Swachh Bharat Mission (SBM) on 2nd October 2014 with a target to make the country clean by 2nd October 2019�

2 Transportation:‘Urban transport’ (UT) is a broad name for a sector that covers a variety of modes of intra-city transport for people and goods, including walking, bicycling, non-motorised transport such as rickshaws etc, private personal transport, i�e�, cars and motorbikes; public transport which could be rail or bus-based; private-public transport such as taxis and para-transit modes among others�24

23 Ibid. pg. 54.

24 Report of the National Transport Development Policy Committee.


29

� Public transport accounts for only 22 per cent of urban transport in India, compared with 49 per cent in lower middle income countries (e.g. the Philippines, Venezuela, Egypt) and 40 per cent in upper middle income countries (e.g. South Africa, South Korea, Brazil)

� Share of the public transport fleet in India has decreased sharply from 11 per cent in 1951 to 1.1 per cent in 2001

� Only 20 out of India’s 85 cities with a population of 0.5 million or more in 2009 had a city bus service

� Road density (km per sq. km) is 9.2 in Singapore, 9.7 in Curitiba, 21.8 in Seoul, 10 in Johannesburg, 3.8 in Chennai, and 19.2 in New Delhi.25

The highly inadequate and poor quality of the public transport system in Indian cities not only poses a major challenge to realising the growth potential of the economy but also has adverse impact on the health and well- being of the people�26 Long hours spent on road journeys, lives lost in road accidents, and air pollution are only some of the effects of the acute problem of transportation facilities in and around cities�

UT is important as it could be a facilitator or could pose a burden on the urban contribution to city productivity and the national economy� The defining trait of urban transportation is the ability to support higher densities in urban areas and efficiently, affordably move people and goods through and in the city� Agglomeration economies rely on provision of basic urban infrastructure services in general and UT infrastructure in particular� It connect people and residential areas to education and employment locations, expanding opportunities and choices for people to access alternate education and employment� 27

The efficiency and effectiveness of the UT system also has an important impact on the health and safety of the commuters in specific and urban residents in general� Safety from traffic-related accidents as well as safety from crime, is also related to the way the city and the transport

25 Ibid. 20. pg. 57

26 Ibid. pg. 56.

27 Ibid. 24. pg. 385.

system is planned and managed� In terms of the health-related impacts of transport in urban areas, vehicular pollution has emerged as the top contributor to air pollution�

In order for cities to perform their role as engines of economic growth and innovation, while providing an improved quality of life to its residents it is very important to integrate the competing demands of transport, housing, and commercial real estate in their development�

In the absence of adequate provision of UT infrastructure including public transport, congestion diseconomies, environmental degradation, deterioration in civic services, fatalities and injuries due to road traffic crashes, and air and water pollution can outweigh the benefits of agglomeration� Well-planned and implemented UT can augment the agglomeration advantages of cities and minimise their congestion diseconomies�28

To some extent, the poor showing of public transport in India can be attributed to the fact that the tax policy regime militates against public transport� The total tax burden for public transport vehicles per vehicle km is 2�6 times higher than for private vehicles� The Parliamentary Standing Committee on Urban Development (Urban Transport) 2010 recommended a ‛congestion tax’ on personal vehicles in the form of a toll tax in congested areas�29 But the Ministry of Urban Development has indicated that ‛in the Indian context, levying of congestion tax may be pre-mature at this stage keeping in view the quantity and quality of the available public transport and the absence of Intelligent Transport System (ITS)’ (Lok Sabha 2010)� Now, the time has come to impose the congestion tax to maintain such a chaotic situation and to reduce the carbon emission for the living of future generation�

Policies related to housing need to recognize that India has an increasingly uid population� A successful housing policy should enable

28 Ibid. pg. 386

29 Ibid. 20. pg.58.


30

horizontal or spatial mobility, namely the ability to move to, between and within cities as job opportunities arise� It should also deliver vertical mobility, so that an aspirational population can climb the socio-economic ladder� These concerns should be embedded in policies ranging from urban design to those related to transaction costs in the secondary market� In this context, two areas namely the rental market and the prevalence of vacancies�

Rental Housing: It is important for both horizontal and vertical mobility as it allows people to access suitable housing without actually having to buy it� Across the income spectrum, rental housing is an important foothold into a city for new arrivals, until they are able to, or choose to, purchase their own homes� For rural migrants, in particular, whose financial portfolios may already be tied up in land and livestock, it is access to shelter that is more important than investing in another lumpy asset that is subject to local market risk�

Nonetheless, the share of rental housing has actually been declining in Indian cities since independence from 54 per cent in 1961 to 28 per cent in 2011�

As a proportion of all housing, renting accommodation is more prevalent in urban areas than in rural� According to the 2011 Census, the share of households living in rented houses was only 5 per cent in rural areas, but 31 per cent in urban areas�

Similarly, larger cities had greater shares of rented housing – from 28 per cent for small towns, 36 per cent for medium-sized towns, to 40 per cent of total housing being rented in large cities� In many countries, including India, home ownership is encouraged as part of socio- economic policy� While there are good reasons for encouraging home ownership, it must be recognized that the rental market is also an important part of the urban eco-system�

Vacant Housing: Despite the shortage of housing

in urban India (more than 18 million households

in 2012) (MHUPA, 2016), there is also a trend

increase in vacant houses: from 6�5 million in 2001

to 11�1 million in 2011� According to the national

census, vacant houses constitute around 12 per

cent of the share of the total urban housing stock�

The district-wise distribution of vacant housing

stock shows a greater prevalence of this

phenomenon in the western half of the country�

Figure 15 shows the number and share of vacant

census houses in urban parts of major states�

Maharashtra has the highest number of vacant

houses (slightly greater than 2 million) followed

by Gujarat (around 1�2 million)� Gujarat has

the highest share of vacant houses to the total

residential stock (18�5 per cent), followed by

Rajasthan (17�3 per cent) and Maharashtra (16�39

per cent)�

India’s housing requirements are complex but till

now policies have been mostly focused on building

more homes and on home ownership� There is a

need to take a more holistic approach that takes

into account rentals and vacancy rates� In turn,

this needs policy-makers to pay more attention to

contract enforcement, property rights and spatial

distribution of housing supply vs� demand�

For the future generation who will live in these

affordable houses, has to get the 24*7 electricity

& water which is a basic right and there is an

urgent need to plan for the social and other

economic infrastructure like educational and

health institutions, parking facilities, open space,

pedestrians and gardens to make living in a

healthy and dignify manner for the aim to make

future generation as an asset for the country�

References:1� High Powered Expert Committee (HPEC) Report on

Indian Urban Infrastructure and Services, 2011, (Ishar

Judge Ahluwalia Committee)�


31

2� National Transport Development Policy Committee

Report, 2014, Planning Commission, GOI�

3� Evolving Perspective in the Development of Indian

Infrastructure, Vol II, IDFC, Orient Black Swan, 2012�

4� National Urban Transport Policy, 2006, MoUD, GoI�

5� Planning and Designing for Sustainable Urban

Mobility, UNHABITAT, 2013�

6� Canthia, E� Smith et�al�, ‘Design with the Other 90%

Cities’, Smithsonian, Cooper-Hewitt, National Design

Museum, New York, 2011�

7� Building the Economy Block by Block: Real estate and

infrastructure, PWC, 2016�

8� Make In India�

9� 12th Five Year Plan, Planning Commission�

10� The Economic Times

11� http://pmayg�nic�in/netiay/English_Book_Final�pdf

12� http://pmaymis�gov�in/PDF/HFA_Guidelines/hfa_

Guidelines�pdf

13� Working Group Report on Migration, 2017, MoHUPA

*The author is an infrastructure sector expert currently

working as an independent consultant. He has worked as

a consultant to the Planning Commission and was closely

associated with formulation of 11th Five Year Plan and

Annual Plans. He also worked with the High level Committee

on National Transport Policy where he helped to formulate

the long term policy on transportation sector. Besides this,

he also worked for the World Bank and RITES Limited.

32

IntroductionEqual access to economic opportunities and the nation’s resources is a precondition for a society to call itself truly progressive and modern� As a corollary of this, a nation’s Political democracy is incomplete without attaining economic democracy for all and freedom from poverty and hunger for its population� This requires complete transparency in decision making, rule of law which treats its citizens without worrying about “fear or favor” and a systematic process of carrying out the economic vision which is based on reforms and openness of the economy suitable for the local conditions�

After receiving massive popular mandate in 2014 General Elections and assuming power at the Central Government, one of the main focus areas for Narendra Modi’s National Democratic Alliance (NDA) Government has been increasing the transparency in Indian economy� This is being done using various means including use of UIDAI (Aadhaar) for government benefit schemes for people, curtailing cash transactions beyond a limit and encouraging more digital and cashless transactions and increasing the tax compliance in the economy� To achieve this end, the important and extremely courageous step which the BJP Govt� has taken was banning the older notes of Rs� 1,000 and Rs500 denomination�

One of the major initiatives of the Govt� is linked to this demonetization decision and the common

Pankaj Sharma1 and Saurav Sanyal2Demonetization, Digital and the Indian Economy

thread which we see across sectors is making

Indian economy more digital and cashless� While

this was a move with the right intentions to weed

out corruption, restrict terrorist activities and

bringing more people into the tax net, we will

look at the various relevant issues concerned with

“digital push” of the Government in this research

paper to assess the effectiveness� We think this

include some of the key questions such as:

1. Why mainstream media finds it difficult to

reach the voice of people at margins and why

beneath the surface sentiment is difficult to

capture?

2. What do the people think on how quickly can

India become a cashless economy? What are

the challenges and whether it is practically

possible to bring behavioral change in people?

3. Are we as a country prepared for the digital

transformation because it also needs

supporting infrastructure? Have we made

enough progress on this?

4. What does India’s central bank (Reserve Bank

of India or RBI) think on demonetization and

its effects on Indian economy?

5. Are there any signs that digital has picked

in the Indian economy and are the data sets

encouraging?

Demonetization, Digital and the Indian Economy

33

Why it is difficult to reach the voice of people at margins?The first point where we begin is trying to develop an understanding of people’s perception about digital transformation� It is important to understand one of the very important questions in the context of post demonetisation scenario and push for a digital and cashless economy in India is: Can India become a digital or cashless economy considering the state of available infrastructure or rather lack of it and widespread poverty and lack of awareness?

More often, when we see the media coverage on economic issues, we notice that the focus has largely been on the issues such as, a) inconvenience caused to common people, b) the Govt’s unpreparedness before major decisions, c) the disruption in the employment and lives of people, d) the disproportionate impact on informal and unorganized sections of the society, and, e) the anecdotal evidence on how people after people and industries after industries are getting affected�

However, we also think that relatively speaking; the coverage of “the human element” is less than adequate more often� We also sense that the coverage is skewed in favor of the happenings in and around the big cities and towns, the people who belong to middle class (including upper middle class and lower middle class) and the sections of the society which have been more vocal or visible to media�

In our view, there is also not enough on how the people on the margins and who doesn’t have a very strong voice to reach out to the world effectively are thinking about various government initiatives in totality and which are the factors that have been influencing their thought process� A more in-depth understanding may not be always different compared to what is there and visible on the surface but nevertheless, it is always worth looking for�

Perhaps the main reason for this fallacy is that all of us get too focused on the socio-economic

class which is similar to us� It always requires much lesser effort to talk to people who are more willing to respond or who are easier for us to figure out and understand� On the other hand, it would require significantly more resource and time allocation (the effort needed to be put in is much more) to reach the people who are too unorganized and reticent�

The examples of Brexit3 poll results in UK and Donald Trumps’s victory in US Presidential elections4 are more about people’s distrust in their incumbent political leadership� In all these instances, the outcome was all about the resentment against the Govt� of the day and the result of a negative vote� People didn’t care who they were electing as long as they were getting rid of Britain’s unfavorable agreement with European Union (in their view and perception) or the established order in the US Govt� which is seemingly harming them and resulting in job losses�

We think the appreciation that it is possible to make errors in reading the “beneath the surface” popular sentiment is important to understand the common people’s reaction to economic issues� While some of the more visible and common aspects get well covered by the print and electronic media, it is not impossible for mainstream media to miss some of the more important aspects� Understanding of this “blind spot” is important to grasp the people’s reaction comprehensively� This is important to understand “on the ground” perception on “digital push”�

Can India be a cashless economy, what do the people think?One of the big push from the Modi Govt� is on cashless economy and promoting digital transactions� Of course, it is too early to say how successful this has been because India is a large and complex country and familiarity or acceptance of a change will take time� Naturally, people are under no illusion that there are genuine challenges and it will take time for them to get resolved� However, when we interact with people, we get the


34

sense that at least people from the “bottom of the pyramid”5 are not very confident that India can become a more cashless economy very quickly�

They also believe that it will take time and it is only “more cashless”, the economy can become� The fact that most people are not excited about this transition is not good news for the Govt� because this would make its task of promoting digital transactions even more difficult� This is also one of the areas where we notice a huge divergence between what the people see as the ground reality and what the Govt� is targeting6�

There are also a significant proportion of the people who think that it won’t be even possible to make Indian economy more cashless even in next few decades� Many of these people think that this idea is a little too far from the ground realities in the country� People think that building the right, adequate and secure infrastructure for digital transactions is a challenge and we should not rush into it�

It is important to highlight that some of the small business operators also highlight that as cash availability improved, people have gone back to their habit of transacting through cash� They say that it has also been noticed that even for the people who experimented with digital transactions, the more convenient and preferred medium is cash� Many of the people also highlighted that once the cash availability improves in the system, it will automatically eliminate the need to go digital�

We think that there is a network effect in play here� Unless a system has the sufficient critical mass, it is always a challenge to shift people to it and this is a “chicken and egg” story� Unless people start using non-cash channels very actively, they won’t find many establishments who will accept digital payments and unless establishments start accepting digital payments, people won’t start doing digital transactions� There are no easy solutions here and certainly, it is unrealistic to expect the transition overnight to a system which is unfamiliar, inconvenient and inefficient, in their point of view�

It is not anyone’s case to argue that people are unreasonably and unnecessarily skeptical� When we talk to these people in a little more detail, there is a sensible view that whether it is cash based transactions or digital transactions, nothing is good or bad in absolute terms� It all depends on the circumstances what is more suitable and hence, there should not be an attempt to force people to choose an alternative which doesn’t work well for them�

Many of these people also say that the Govt� is getting it entirely wrong when it wants to push digital transactions across the board� This is because there is really no need to waste time and energy on smaller transactions, it is the bigger transactions in cash for purchase of items like automobiles, consumer durables, jewelry and other valuables which should be monitored if the Govt� is serious about eradicating Black Money� The people think that Govt� should be focused on areas where the process will be more efficient as in it should devote more time and effort where the returns are higher�

Another interesting take away from our conversations is that many people think that the issue of making India a cashless economy and making the system more transparent are not always linked� The cashless or digital transactions require a change in habits for people and that happens slowly and it is also not correct that when someone is carrying out cash based transaction, the only idea is to hide the transaction and create Black money� The digital transactions may be helpful but the Govt� would not be able to achieve anything if it tries to do many things simultaneously�

So far, we have seen that in general, there is support for Govt� on economic policies because people think that the Govt� steps are helpful in creating more equality between rich and poor� However, making India more cashless by encouraging digital transactions is one area (and perhaps the only one) where there is a huge disconnect between what the Govt� proposes and what the people think� People think India is neither need a


35

shift away from cash based transactions nor the country is ready for it� People think that the Govt� focus should only be on high value transactions if it intends to target Black Money�

Digital needs supporting infrastructure and there is a long way to goIn November 2016, when Prime Minister Narendra Modi announced the decision of demonetization7, the Central government also started its push for digital payments� In one of the articles published on the website www�cxotoday�com, it has been highlighted that there is very little evidence to suggest any behavioral change because of demonetization8� The article also talks about the fact that the increase in digital payments was caused by artificial constraints on cash transactions�

Avery important issue is lack of infrastructure required to support digital transactions� The article also says that as compared to other large economies, India continues to be a laggard� For example, despite a near doubling of POS terminals after demonetization, India is still ranked last among major economies in terms of the number of POS terminals per million people� This comparison is not just with developed countries but also some of the peer group countries are also far ahead of India in terms of digital infrastructure� This becomes a challenge in increasing digital and cashless transactions�

Another report highlights that the number of point-of-sale (POS) machines in July 2017 stood at 2,840,113 growing 96�7% year-on-year, Reserve Bank of India (RBI) data showed vs� number of POS machines stood at 1,443,899 in July 20169� The rise in the number of POS machines was mainly due to a concentrated effort by the government to improve the number of terminals following demonetization� However, this report also talks about selective penetration�

There is still a concentration of POS from the top banks in the country which include State

Bank of India, ICICI Bank, HDFC Bank, Axis Bank and Corporation Bank� These banks continued to have the highest number of POS terminals accounting for more than 70% of all terminals in the country� According to a 2015 Ernst and Young report, there were only 693 machines per million of India’s population, compared to similar emerging countries such as Brazil, which has 32,995 terminals per million people and China and Russia, each of which has around 4000 terminals per million people�

There are two more issues which require Government attention, a) many of these POS terminals were installed by establishments because either they were offered free by the banks or the banks were forcing the establishments to get these installed and the usage needs to be monitored, b) in several cases, the maintenance and service of these terminals is also a challenge and the users (both the customers and establishments) find it difficult to carry out digital transactions�

There are also issues with how will bear the costs for digital push – a) The banks and Financial Institutions in order to expand their reach or, b) The shops/establishments to attract more customers or, c) The Government in the form of subsidy to encourage more digital transactions or, d) eventually, The customers to have the convenience to go cashless� Till the time there are artificially skewed incentives for customers or establishments and/or government enforced compliance by banks, it is difficult to believe that the adoption of digital is really based on free market principles� Once things stabilize, we will get the true picture how the real adoption rates are for digital and cashless�

What Does the RBI Annual Report Say? In end-August 2017, Reserve Bank of India (RBI) had released its Annual Report for the period July 1, 2016 to June 30, 20179� This report is a detailed and comprehensive document highlighting not just the issues concerning the Central Bank, but


36

it also covers several important aspects of Indian economy� For FY17, the event which perhaps had maximum impact on Indian economy was demonetization and push for digital economy�

Some of the critics of demonetization call it a “Grand failure”� The reason is that demonetization failed to deliver on its primary objective i�e� curbing black money� 99% plus of the old currency came back in system and only about US$ 2�5 billion of unaccounted money was collected by the government� The primary goal of demonetization was targeting black money which was not achieved while it made a serious negative impact on growth an unorganized sector�

However, that is only one aspect of demonetization� As per RBI report, there was a positive impact on several sectors�

1. There was an improvement in households’ financial savings, post demonetization� However, we think what RBI refers to is largely linked to high deposits of old currency which was forced�

2. Inflation reversal got accentuated by low food prices, especially of vegetables, in the wake of demonetization in November 2016� While low inflation is good, the negative or barely positive food inflation has been a primary driver behind this�

3. Post demonetization, the pace of monetary transmission from the policy repo rate to banks’ lending rates accelerated significantly, aided by the increase in the share of low cost current account and saving account (CASA) deposits in bank funding� Not everything has been passed on by the banks�

4. Reductions in bank lending rates post-demonetization should support investment demand of companies� We think this alone is not going to be sufficient�

5. There was an increase in cashless transactions and more adoption and acceptance for digital�

However, there was some important negative impact as well� As per RBI report, the cash intensive

sectors suffered because of demonetization and

push for digital/cashless�

1. The slowdown was pronounced in H2 FY17

as construction and real estate, which relied

to a large extent on cash transactions, were

severely impacted following demonetization�

With respect to financial, real estate and

professional services, the slowdown was the

sharpest in real estate sector�

2. Industrial output seemed to have been

impacted, by demonetization as IIP (Index

of Industrial Production) growth during

November 2016 to March 2017 was 2�6

percentage points lower than in pre-

demonetization period (April – October 2016)�

3. Because of demonetization, there was negative

impact on construction activity and hence,

steel consumption and cement production�

These activities decelerated/contracted from

their levels a year ago�

4. There was evidence which pointed towards

fire sale of perishables from November

2016 post demonetization� Perishable items,

primarily vegetables were the principal agents

driving the collapse of food inflation� It had a

negative impact on Indian agriculture�

5. There was a negative impact on discretionary

consumer demand due to demonetization�

This reflects in the results of companies and

also in IIP data�

Nevertheless, there are some encouraging signs

on growth of digital payments

Notwithstanding the Govt’s seriousness to push

digital, we have discussed the challenges in detail

in terms of how difficult it is for Indian economy

to become cashless� We have seen that there is

not just people’s reluctance because for them it

doesn’t add value or the real and genuine problem

of lack of adequate infrastructure� There is also an

issue of who will finally bear the costs� However,

this doesn’t mean that things are only looking bad�

That will be a completely erroneous assumption to

make and that is not what we are proposing� There


37

are some important, positive developments and encouraging data points to indicate the progress on digital transactions in Indian economy�

As per one of the reports from www�ndtv�com which is based on data from National Payments Corporation of India, there has been a consistent increase in growth of digital payments in India In previous twelve months� National Payments Corporation of India (NPCI) which is an umbrella organisation for all retail payments in India reported that NPCI’s Digital transactions have increased to 145�46 Million in December 2017 from 4�15 million in January11� The value of transactions in December also jumped to Rs 131�44 billion from Rs 15�68 bn in January 2017�

Transactions on UPI rose exponentially post July last year, when the number was 11�44 million� After growing 100 per cent month-on-month in September and October, growth was under 40% in transactions in November and December 2017� However, there is a catch� Some of this growth could actually be attributed to generous incentives� NPCI offered cash back of Rs� 25 in referral promotion is to promote more downloads of the BHIM app� This may have prompted more people to come on board�

Another interesting report from Business today highlight that the digital transactions have increased significantly in India12� The report says that Digital transactions rose 6�05% to 1�06 billion in December from 997�1 million in November, according to provisional data released by the Reserve Bank of India (RBI)� This is the first time that the transaction volume has crossed the 1 billion mark� The value of these transactions was also the second highest in a month in the last one year� Transactions worth about Rs125�51 trillion were carried out in December through modes of payment like credit and debit cards, the unified payments interface (UPI), unstructured supplementary service data (USSD), prepaid payment instruments (PPIs) and internet banking�

The world is also taking notice as changes occurring in the country are discussed across the world� In one of the news stories in Forbes in June

201713, the journal highlighted that apart from Aadhaar, India added another component to its digitized system in 2016� In a series of secured and connected systems that allow people to store and share personal data such as addresses, bank statements, employment records, and tax filings, the information can be stored digitally in a safe and secure manner� Forbes believes that this could be the framework for a new digital society� With demonetization, the transition to a digital society began in India, where less than 5% transactions were non-cash�

Conclusion Though Demonetization and the push towards digital and cashless society are two separate initiatives, the developments were intricately linked with each other� More transparency means less reliance on cash transactions and hence, digital became one of the important foundations of success of note ban initiative of Govt� of India� Without one, another cannot succeed fully and this means that while there was reluctance initially, it was an imperative that Govt� will push harder to make digital a success if the economy has to reap the complete gains of more transparent system�

Even we have noticed that while people were generally supportive of government’s attempt to target corruption and its initiatives to target black money, the enthusiasm towards “digital” was less visible among the masses� This was not unnatural either� The primary reason was that there was a lack of needed infrastructure to make digital an immediate success in a complex, large and diverse country like India� Moreover, the behavioral shifts in people are not easy because of widespread poverty and lack of awareness around digital and cashless transactions�

As per Reserve Bank of India, the success of demonetisation had a mixed record� Though it led to some of the positive outcomes for the economy, the damage especially to unorganized and unstructured economy was significant� However, it is too early to write off the decisions of the Govt� on either the demonetization or digital initiatives� It would certainly require more


38

time to understand the true implications of these decisions which not just have far reaching consequences but also needed to make the Indian economy more equitable and to increase the compliance with law�

Some of the initial data points are encouraging nevertheless� There is certainly a much more proactive effort from banks and financial institutions to increase the POS terminals and also establishments are much more willing to experiment with newer payment methods� The customers also are seeing the benefits as the number of transactions have reported explosive growth in some cases� In an economy which is one of the Top Five in the world14 and has more than a billion people, changes require “shock therapy” at times and though not all the consequences be intended or planned, the process is irreversible and much needed� This was the case with “digital”, “demonetization” and India�

Notes and References1� Pankaj Sharma is an engineer (IIT Kharagpur, 1999)

and MBA (Faculty of Management Studies, University

of Delhi, 2003) with 15+ years of diverse work

experience in various leadership roles with Global

investment banks, Indian Equity brokerages, State

Owned Enterprises and startups� Pankaj turned full

time author in late 2016 with an objective to do

more in-depth research on contemporary issues�

His first two books along with Saurav Sanyal are:

Demonetization: Modi’s Political Masterstroke (ISBN:

9789386826961 at Bloomsbury India) and 2019: Will

Modi Win? (ISBN: 9789387324176, KW Publishers

India)� Before this, he was an Equity Analyst and used

to track Power Utilities, Capital Goods and Coal for

UBS India for more than seven years� In this role, he

was ranked ‘No� 1 Utilities Analyst’ in Asia Money and

‘Runner Up’ in Institutional investor Polls� He had also

received Thomson Reuters’ Starmine Analyst Award

for ‘Best Earning Estimates’ and ‘Best Stock Picker’�

Pankaj has also been a regular contributor in print and

electronic media�

2� Saurav Sanyal has donned many hats successfully in

an illustrious career so far� He has been a Scientific

Research Officer, Business Leader, Sales and Marketing

Professional and Organisation Builder� He is MBA from

FMS Delhi (2003, Full Time Program) and M�Sc� from

IIT Madras (1998) with a flair for keen observation

and a sharp academic mind� He has over 17 Years of

experience with Global Multinationals such as Unilever

India, RB group and currently heads the business

development for Elsevier Clinical Solutions in India�

Earlier, Saurav worked at RB Group (earlier Reckitt

Benckiser Plc)� He championed Sales and Distribution

projects, spearheaded the organisation’s Key Account

Management Practice and executed high value Trade

marketing projects� At Unilever, Saurav worked in

Chemical Engineering and Materials Science and was

also awarded with Process Equipment and Technology

Innovation Awards�

3� Brexit vote was an unexpected outcome� http://www�

cnbc�com/2016/07/04/why-the-majority-of-bre-were-

wrong�html (Accessed in June 2017), http://www�

businessinsider�in/Pollsters-now-know-why-they-

were-wrong-about-Brexit/articleshow/53363062�cms

(Accessed in June 2017)�

4� Donald Trump was trailing his Democrat rival

Hillary Clinton as per the surveys� http://www�

usnews�com/opinion/op-ed/articles/2016-11-10/

why-the-polls-got-donaldtrumps-2016-win-wrong

(Accessed in June 2017), http://www�pewresearch�

org/facttank/2016/11/09/why-2016-election-polls-

missed-their-mark/ (Accessed in June 2017)�

5� The bottom of the pyramid, bottom of the wealth

pyramid or the bottom of the income pyramid is

the largest, but poorest socio-economic group� In

global terms, this is the 2�7 billion people who live

on less than $2�50 a day� Management scholar C K

Prahalad popularised the idea of this demographic

as a profitable consumer base in his 2004 book

The Fortune at the Bottom of the Pyramid� Prahalad

said that catering to the lowest economic category

in population is also a profitable consumer base�

Prahalad proposes that businesses, governments, and

donor agencies stop thinking of the poor as victims

and start seeing them as creative entrepreneurs and

consumers, https://en�wikipedia�org/wiki/Bottom_

of_the_pyramid (Accessed in June 2017)�

6� For details, please refer to Chapter 5 : Search for

On-the-Ground Sentiment from Demonetization:

Modi’s Political Masterstroke (ISBN: 9789386826961

at Bloomsbury India) by Pankaj Sharma and Saurav

Sanyal� An incisive and insightful take on the issue,

Pankaj Sharma and Saurav Sanyal’s book gives agency

to the ordinary Indian voters, the ‘torchbearers of

democracy’� Going beyond the idea of the citizen


39

as a mere recipient of the government’s edicts or

munificence, the authors focus on the power of the

common man as a voter and the repercussions of

demonetization� In dissecting the political implications

of demonetization, the authors espouse a varied yet

nuanced approach� From discussing the role of human

psychology in making political choices to a search for

an on-the-ground sentiment in determining the factors

of influence, the book analyses demonetization as

THE political issue for the future of Indian democracy�

7� In his public address on television on the evening

of 8 November 2016, Prime Minister Shri Narendra

Modi announced that Rs 500 and Rs 1000 banknotes

would not be in circulation from the midnight of 9

November� PM also announced that the new notes of

Rs 2000 and Rs 500 have been launched� This banning

of old notes is known as demonetisation� The Reserve

Bank of India also announced a window of fifty days

until 30 December 2016 to deposit the demonetized

banknotes in accounts�

8� http://www�cxotoday�com/story/demonetization-

anniversary-whats-the-state-of-indias-digital-

payment/ (Accessed in January 2018)�

9� The number of POS machines grew 96�7% year-on-year

in July: RBI data by Sashidhar K J dated 26th September

23017 https://www�medianama�com/2017/09/223-

pos-terminal-data-rbi/ (Accessed in January 2018)�

10� https://rbi�org�in/Scripts/Annual Report Publications�

aspx? year=2017 (Accessed in January 2018)�

11� https://www�ndtv�com/business/npcis-digital-

t r a n s a c t i o n s - s u r g e - t o - 1 4 5 - 4 6 - m i l l i o n - i n -

december-1796165 (Accessed in January 2018)�

12� http://www�businesstoday�in/latest/digital-sbi-

myntra-gdp-psu-banks-govt-economy-business-rbi/

story/267276�html (Accessed in January 2018)�

13� India Is Likely To Become The First Digital, Cashless

Society by Olivier Garret (Guest post written by

Stephen McBride) 28th June 2017 at Forbes� https://

www�forbes�com/sites/oliviergarret/2017/06/28/

india-is-likely-to-become-the-first-digital-cashless-

society/# (Accessed in January 2018)�

14� The world’s top seven economies, according to

the 2017 IMF forecast are as follows: 1�U�S� - $19�4

trillion, 2�China - $11�9 trillion, 3�Japan - $4�9 trillion,

4�Germany - $3�7 trillion, 5�France - $2�575 trillion,

6�U�K� - $2�565 trillion and 7�India - $2�4 trillion�

http://money�cnn�com/2017/11/22/news/economy/

uk-france-biggest-economies-in-the-world/index�html

(Accessed in January 2018)�

40

AbstractThere has been a renewed interest towards the Agrarian Crisis and the issues that India’s rural economy faces ever since the Prime Minister has announced his commitment to double the cultivator’s income by 2022� Critics have pointed out that it is rather difficult if not impossible to double the income within the proposed time frame� In this paper, we look at existing trends in agriculture and provide for a roadmap that can help double the real income of cultivators by a multi-dimensional approach rather than a simple strategy that aims at increasing agricultural productivity and the prices of the crops being produced� We provide a broad macroeconomic picture that can help in doubling the cultivators’ income in India in aggregate terms at the macro level and suggest policy recommendations accordingly�

Keywords: Doubling Farmers Income, Indian Agriculture, Agricultural Economics

IntroductionIndia witnessed a remarkable sustained growth over the last few decades as it undertook significant reforms dismantling the infamous “license raj”� Though, overall growth picked up in India since the 1980s, the growth of agricultural sector has largely been volatile but and agricultural sector’s importance has steadily declined over the years as far as contribution towards the GDP is concerned�

Karan Bhasin1, Prachi Jhamb2 and Rutwik Jagannath3

1Research Associate at Pahle India Foundation�, karan�bhasin@pahleindia�org2Research Fellow at Centre for Regional Trade, IIFT, prachi�crt@iift�edu�in3Researcher associated at Public Policy Research Centre, jagwik@gmail�com

This result assumes much significance as the

agrarian sector till date remains the dominant

source of employment in India with as much as

60% of the population dependent upon the sector

for their livelihood� As a result of this mismatch,

there is a growing consensus about the urgent need

to shift people from the agrarian sector towards

the manufacturing and services sector in order

to ensure that the dependency on the agrarian

economy reduces� By reducing the dependency on

agriculture and related activities, we can address

a big part of the problem of rural distress: the

continuously declining land holdings due to high

dependency in the rural areas� The purpose of

this paper is not to address the problem of high

dependency on the agrarian sector for employment�

Given it as a fact, this paper is trying to focus on

how to double the income of cultivators in India� It

is important to clearly mention that cultivators are

never a homogenous entity as they vary in terms

of numerous criterions, foremost of them being

by the size of landholdings� We are concerned

about doubling the income of the poor and the

landless cultivators; that is, cultivators with small

land holdings and tenants who operate on land

and engage in cultivation� The reason why we

focus on them is largely due to their marginalized

status along with our view that due to inadequate

development of capitalism in the rural economy,

the trickle-down effect is not observed in India�

Doubling Farmers Income in India: A Policy Perspective


41

Thus, most policies have over the years benefited the rich cultivators while the poor cultivators have been exploited by the feudal system of the rural ecosystem� Further, we assume throughout a simplistic understanding of the rural ecosystem as a system of different markets for inputs and outputs that are interlinked due to pre- capitalist relations that are prevalent in India�

The process of cultivation is depicted below as follows:

Purchasing of Inputs

Cultivation Activity

Transporting Produce to

Markets

Sale of Agricultural

Produce

At numerous stages of the cultivation process a cultivator require resources and faces numerous costs associated with acquiring or leasing/borrowing these resources� It is imperative to ensure that the cultivator is able to acquire the resources in a competitive set-up so as to ensure that he/she is not exploited in the process� By making the set-up a competitive one, the costs that the cultivator faces may reduce, however that will only happen over a period of time and given that these costs of acquiring resources are a significant contributor to the overall costs of cultivation, it is important to bring them down at reasonable levels by various policy level interventions� Keeping these issues in mind and considering them as given, we propose a series of recommendations that can help in doubling the income of cultivators or rural households over a period of time from both farm and non-farm activities� Before we go further, we define the income of the rural household as follows:

Income = Income from Non-Farm Activities +

Income from Farm Activities + wage income

from labor services

Income from Farm Activities = Revenue from

Sale of Produce – Cost of Cultivation

For the purpose of the paper, wherever we make a reference to Income or Income from Farm Activities, they’d be defined as indicated in the equations above� The paper is structured

in a manner in which first we discuss the broad

trends of growth of the agrarian sector in India

followed by a brief discussion of markets and

pre-capitalist nature of the rural economy� Upon

understanding the prevalent situation and taking

the lack of developed markets in the rural areas

in India as a given, we look at how to double

the income of the rural household by looking

at compositions of income and how can they

be augmented using various policy measures�

We also look at International Markets and how

can India participate actively in International

Agricultural markets to the benefit of our small

and poor cultivators� We conclude by a series of

recommendations, most critical for long term

viability being land reforms and development of

agricultural input and output markets to create

a capitalist setup for both� We also provide short

term recommendations that will be instrumental

in ensuring that the rural economy is alleviated of

the prolonged stress that it has witnessed since

last few decades�

Growth of Agricultural Sector since IndependenceTable 1 shows that, since independence the

percentage share of agriculture in National Income

has been declining from 57�7 during 1950-51 to

24�6 % in early 2000s�

Table 1: Share of agriculture in National Income

since Reforms (Percent share in economy)

Year GDP

1950-51 57�7

1960-61 53�0

1970-71 46�3

1980-81 39�7

1990-91 32�2

2000-01 24�6

Source: National Accounts Statistics of India (1950-51 to 2000-01)

During liberalization it was argued that there

would be a favorable shift in the terms of trade

for agriculture; that the producers are able to


42

reinvest their surpluses from farming to increase growth rate & improve productivity in agriculture� The reality was at odds with these beliefs, as there wasn’t much improvement in terms of trade for agriculture during liberalization, instead there was a fall in capital formation and a fall in expenditure on irrigation and extension services�

Table 2 shows a decline in agriculture’s share in GDP� The share has declined to a larger extent in the 90s and 2000s� The decrease in share has been at a rate of 4�4 %, 5�6 % and 7�3 % in 80s, 90s and 2000s respectively� This shows that there has been a declining importance of agriculture as an “income generating activity” in India�

Table 2: Share of Output from Agriculture in GDP, 1981–82 to 2013–14

Year Share %

1981–82 29�6

1989–90 25�2

1994–95 23�5

1999–20 19�6

2004–05 16

2009–10 12�3

2013–14 11�8

Source: Handbook of Statistics, Reserve Bank of India

While the above table shows how agriculture performs with respect to the overall economy in general, when we take a closer look at the growth rate of agriculture, we find that the growth rate has also been declining since the period of liberalization� Table 3 shows that the growth rate of GDP of agriculture has been decreasing from the time of liberalization in India� This shows that agriculture has been losing its importance in India’s growth path� This also reveals that investment in agriculture has been declining as compared to investments in other sectors� In fact, public and private capital formations have behaved differently� In other words, capital formation which is important for long term growth in agriculture has stayed stagnant in 1980s, while public capital formation continued to fall during 1990s and only after 2004-05 its level surpassed

the level attained in 1981-82, private investments

on the other hand increased quicker than public

investment in 1990s� Most importantly, the share

of public capital formation in the aggregate capital

formation in agriculture reduced from 52 % in

1981-82 to 21% in 2012-13 (Roy, 2017)�

This finding is clearly evident in Table 4 and it has

profound implications for the agrarian economy

and it provides an important insight as far as the

causes for current agrarian distress are concerned�

Table 3- Growth Rates of GDP of Agriculture

Sector and GDP of the Economy, 1981–82 to

2013–14 (%)

Periods Growth Rate of Agricultur

GDP Growth Rate

1981–82 to 1989–90

2�9 4�7

1990–91 to 1999–00

2�8 5�3

2000–01 to 2009–10

2�4 6�8

2010–11 to 2013–14

2�1 3�7

Source: Handbook of Statistics, Reserve Bank of India

Chand and Kumar (2004) state that public capital

formation has a much more important role in

ensuring long term growth in agriculture because

of its difference in terms of nature from private

investments� This is because public investment

focuses more on development on irrigation

and other infrastructure plans which is not the

focus of private investment� Therefore, a fall

in public capital formation up till 2004- 05 was

not compensated enough by an increase in the

rate of private investment and it had an adverse

impact on agricultural growth rate (Roy, 2017)�

The importance of spending on irrigation has

not been realised as can be seen in Table 5 that

the expenditure on irrigation as a percentage of

GDP has continued to fall since 1980� Since the

GDP has been increasing throughout, it reveals

that a lesser and lesser share of income generated

is invested back as an input for agricultural


43

growth (Roy, 2017)� Access to irrigation has two-

fold effects that are important from a farmer’s

perspective, firstly, it reduces the dependence

of the farmer on rain thereby making his output

less uncertain and secondly, it reduces the

costs of cultivation and significantly augments

the agricultural productivity� In that context, a

declining share of public investment along with

the results of the decline in outlays on irrigation

as a share of GDP provides some insight so as to

why the agricultural growth has declined since the

economic reforms� Another important aspect that

needs to be duly considered is the expenditure on

research and extension services in agriculture and

its impact on agricultural productivity� According

to the results in Mohan (1974), the states that spend more on research and extension services in agriculture attained more productivity compared to other states� This result is significant as agricultural productivity is a significant variable that will immensely impact the income of a farmer� Given the critical nature of expenditure on research and extension services in agriculture, it comes as a surprise that in Table 6 we witness that expenditure on research and extension in agriculture as a percentage of GDP has been low ever since 1960s and has not increased even after the economic reforms� In fact, Evenson et al� (1999) mentions that it has been lesser than the average percentage share in developing countries in 1990s (0�75%)�

Table 4: Capital Formation in Agriculture (Rs.)

Year Public Investment Private Investment Total

1981–82 12,723 11,549 24,272

1982–83 12,665 13,467 26,132

1983–84 12,962 14,816 27,778

1984–85 12,488 12,938 25,426

1985–86 11,248 12,960 24,208

1986–87 10,667 13,051 23,719

1987–88 10,981 17,816 28,797

1988–89 10,302 15,564 25,866

1989–90 8,909 17,132 26,041

1990–91 8,938 29,116 38,054

1991–92 7,901 16,634 24,535

1992–93 8,167 22,862 31,030

1993–94 8,907 19,230 28,137

1994–95 9,706 17,183 26,890

1995–96 9,560 17,777 27,336

1996–97 9,225 20,589 29,814

1997–98 7,812 24,692 32,504

1998–99 7,949 24,956 32,905

1999–20 8,668 41,483 50,151

2000–01 8,085 37,395 45,480

2001–02 9,712 47,266 56,978

2002–03 8,734 46,934 55,668

2003–04 10,805 42,737 53,542

2004–05 16,187 38,309 54,496


44

Year Public Investment Private Investment Total

2005–06 19,940 42,629 62,569

2006–07 22,987 44,167 67,154

2007–08 23,257 52,745 76,002

2008–09 20,572 68,137 88,709

2009–10 22,693 70,640 93,333

2010–11 19,854 72,181 92,035

2011–12 21,184 86,958 1,08,142

2012–13 23,886 88,371 1,12,257

2013–14 23,191 72,446 95,637

Source: Planning Commission of India and Agricultural Statistics at a Glance (2014)

Year GDP

1990 33572

1991 34867

1992 35216

1993 35218

1994 35301

1995 35379

1996 35008

1997 33092

1998 32909

1999 32854

2000 32734

2001 32640

2002 32443

2003 32283

2004 32107

2005 31967

2006 30610

2007 30393

Source: Rawal (2013)

Table 5: Share of Outlays on Irrigation and Flood Control in GDP (%)

Year 1981-82 1990-91 1995-96 2000-01 2005-06 2011-12 2013- 14

Share 1�4 0�7 0�7 0�7 0�8 0�6 0�6

Source: Economic Survey of India, various years


45

Table 6: Public Expenditure on Research and Extension in Agriculture and Allied Sector as Share of GDP of Agriculture and Allied Activities (%)

Year Research and Education

Extension

1960–62 0�21 0�09

1970–72 0�23 0�14

1980–82 0�39 0�11

1989–91 0�41 0�16

1992–94 0�40 0�15

1995–97 0�38 0�14

1998-2000 0�44 0�15

2001–03 0�52 0�13

2004–06 0�52 0�13

2009–10 0�30 0�06

2011–12 0�32 0�05

Source: Roy (2017)

On the credit side, since 1990s there has been a sharp fall in the number of banks in rural areas (Table 7) and the amount of loans extended to agriculture and priority sectors (Table 8) have also fallen steeply� “The policies of financial liberalization have been associated with withdrawal of banking services in rural areas (Ramachandran and Swaminathan, 2005)�”

Table 7: Number of rural branches of scheduled commercial banks, India, 1978 to 2007

Year Branches

1980 14171

1985 25541

1990 33572

1991 34867

1992 35216

1993 35218

1994 35301

1995 35379

1996 35008

1997 33092

1998 32909

1999 32854

Year Branches

2000 32734

2001 32640

2002 32443

2003 32283

2004 32107

2005 31967

2006 30610

2007 30393


Table 8: Share of priority sector and agricultural loans in outstanding credit (per cent)

Year Priority Sector

Agriculture

1981 36 17

1985 40 17

1986 41 17

1988 44 15

1991 38 11

1995 34 11

1996 33 11

1997 35 11

1998 35 11

1999 35 10

2000 37 37

2001 33 10

2002 33 10

2003 32 11

2004 35 11

2005 36 11

2006 36 13

2007 36 13


This decline in banks and priority sector lending to agriculture directly impacts the cost of cultivation� In order to meet their need for capital, they are forced to take loans from money lenders, big peasants and landlords for purchasing of seeds, fertilizers etc� and these loans come with an exceedingly high rate of interests and significantly


46

exploitive terms of contract� Often, these loans require the farmer to provide some form of labor service to the lender for free or prohibit him from selling his produce in the open markets� They are forced to sell their produce to the lender at a predetermined price� This predetermined price is less that the market price� As a consequence, the small farmer faces a high interest costs and is unable to realize the fair price for his produce and he is stuck in a perpetual debt trap that results in significant reduction in his land holdings� Such contracts highlight the pre-capitalistic nature of the rural economy that is inherent in India and is largely due to the agrarian relations that resemble a semi-feudal system�

Pre-Capitalistic Nature of Rural Economy

There has been a presence of landlordism, discrimination against those from backward classes, traditional tenancy relations, role of money lenders etc� in India’s rural economy� In states like Bengal, Orissa and Bihar, the British introduced the Zamindari system where zamindars (who were given rights to collect taxes) subdivided the areas into different zones and intermediaries emerged to collect taxes and there was a huge burden on cultivators� This led to exploitation of the peasants� In other princely states, there were big jagirdars who controlled many villages� More than half of the surplus was given to the jagirdars or state as rent and thus peasants were exploited�

After independence, there was abolition of Zamindari system and initiation of land redistribution, land ceiling policy with the objective to allocate the surplus land to the rural poor and limits were introduced on the ownership of land� However, these policies were not successful in most states except in Bengal and Kerala (Srikanth, 2011)� Patnaik (1976) mentions that “there is a high degree of concentration of both land and non-land resources with a minority of cultivators, while the majority have command over a disproportionately low share of resources�” The eighth round of NSS reveals that the top 15 percentage of the households had ownership of 70 percentage of the total land while the lowest

60 percentage of the households had less than 6 percentage of the total land (Patnaik, 1976)� This reveals a high degree of “economic differentiation” within the cultivators in the rural India�

The production relations in India can be described as semi feudal instead of capitalist� There are two modes of surplus accumulation – one is by means of production and second by means of money lending� By money lending, big landowners often exploit their position by charging exorbitantly high interest rates along with the exploiting nature of contracts that often comprises of free or subsidized labor services that the borrower is obligated to provide along with the high interest rate� The borrower may also be forced to sell his produce to the money lender at a rate which is less than the market price� Bhaduri (1973) states that Indian agriculture is characterized by four features of semi – feudalism: “Share cropping; Indebtedness of the small peasants; Landowner as the lender of consumption loans; Lack of accessibility to market for the small tenants�” The ones who are the least fortunate amongst the sharecroppers are called “kishan” and he is hugely under debt since a major share of his produce is taken away by the landlord, he is left with insufficient amount of food for self-consumption until next harvest and his only option is to borrow resources for consumption� Kishan borrows from the landowner, who apart from enjoying property rights on land also indulges in money lending and provides consumption loans� This explains how the kishan is tied to the landowner as he cannot move out without paying his loan which is indirectly similar to the feudal system even though the kishan is free to move legally� “The semi-feudal landowner exploits the kishan both through his traditional property right on land and through usury and both these modes of exploitation are important features of this type of agriculture�” (Bhaduri, 1973)� The rate of interest on consumption loans is extremely high since the kishan has no asset to keep as collateral and also does not have “access to the commodity market” to sell his produce and therefore cannot benefit from price fluctuations and even suffers due to it since he borrows (before


47

harvest) at a time when the market prices are

high and have to pay back at a time when market

prices are lowest (after harvest)� Therefore, the

kishan suffers due to lack of access of the capital

market as well as commodity markets� He further

explains that since usury is a significant mode of

exploitation and depends on the kishan’s need to

borrow for consumption purposes, therefore for

the continuation of this process any technological

improvement that shall raise productivity of the

kishan would be objectionable to the land owner

as it will weaken the structure of semi-feudalism�

So, it will be undesirable for the land owner to

adopt any technological improvement as long

his gains from money lending exceed his gains in

income from improving productivity�

The study by Rawal (2013) shows that in rural

India, “tenancy that has characteristics of rack

renting can continue to exist (or reappear) side

by side with processes of differentiation such as

the creation of wage labor, and de-peasantisation

of large sections of rural population” The paper

shows case studies of three villages in three

distinct areas, of coastal Andhra Pradesh, western

Uttar Pradesh & Haryana� One of the case studies is

of a village Birdhana located in Fatehabad district

of Haryana is explained here- Birdhana has a very

high inequality in terms of land ownership and

has a Gini coefficient greater than 0�9� Around 2

% of the households owned 42% land while 77% of

households had no land�

There is a distinct “tenancy-cum-labor” contract

that exists here called a Siri contract� It is quite

similar to sharecropper’s contract in terms of

the type of payment� The cost of production

was divided among the landowner and the siri

in a ratio that was pre-decided� The siri was also

supposed to provide for all labor needed for

work and had to bear all cost for labor� Also, all

decision-making authority was in the hands of

the landlord in terms of what crops to sow, the

kinds of inputs to be used etc� However, the terms

of the contract were not consistent, i�e� the ratio

of siri’s share in cost could vary and could be

around or than 60 % in many cases� There were

two consequences� One, that there was a creation of a class of employees called siri who were hired by the landlords and who hired the casual workers� Two, in order to earn some net income, they started to hire family labor in order to save cost of labor� This led to children, old people in the households contributing to work as far as they could� Another alternative that was used was replacing the cost of labor with machines, that were cheaper than employing casual labor� Casual labor was employed only when the work could not be done by machines and when family labor was not feasible� Still, in order to cut costs, the siri hired people who could work for lower wages and for longer time only through their caste and social associations� “Severe forms of un-freedom and bondage were characteristic of employment conditions of most siris” (Rawal, 2013)� They were always in debt from the landlord and thus not free to leave their job until they paid their debt� Other restrictions included not being able to leave the land without supervision and some person from their household was always supposed to be present on the land; they had to provide all kinds of services, be it, agricultural non- agricultural or even domestic labor work for the landlord Loans taken by siri were charged an interest of around 3% every month� Siris suffered from losses most times, and when they were expelled they had a threat of deprivation of their assets by the landlord� The reasons why siri system became common were a) inequality in terms of land ownership; b) technological changes, where labor was replaced by machines which reduced the labor demand; and c) lack of availability of cheap credit, loans and lack of employment opportunities for casual work�

Thus, what is apparent is the fact that the agrarian relations in India do not represent capitalistic tendencies and thus, the markets for credit, inputs, labor and produce are not disconnected� It is such interlinkages that result in a semi-feudal or pre-capitalist tendency in Indian Agriculture which is largely responsible for the growing disparity between the rich and poor farmers� Given that all agricultural income is untaxed, and there is no land


48

ceiling surplus being seized and redistributed, it means that the redistribution of resources from rich to poor is not taking place which is largely responsible for the status-quo situation of agrarian relations� The linkages or bondage to work for a particular money lender, or to be forced to sell the produce at a lower price than the market rate to the money lender often inhibit the free-market spirit or the realization of MSPs� Given the current agrarian relations, it makes it exceedingly difficult to ensure that benefits of government schemes and policies reach the marginalized farmer who’s exploited by the rich farmers�

Doubling the Income of farmersWe are interested in augmenting the real household income for the rural households� The reason why we pick a measure for income to be real in nature is because it is the purchasing power of income that matters more than the nominal value� This follows from the fact that, if the government was to augment income by increasing the MSP for agricultural commodities, though the nominal income may actually increase, however the real income may fall due to inflationary pressure of the hike� In essence, what we are saying is that the income of a cultivator can be largely determined by the price and the endowment of the commodity that he produces� This determines his purchasing power� The choice to focus income at household level rather than individual is also a deliberate attempt as in the agrarian system, household is the unit of production as most cultivators tend to employ family labor for cultivation purposes and only if family labor is not sufficient is when they choose to employ outside labor� The same is applicable for non-farm activities� It must be duly noted that the NSSO data on Consumption Expenditure Survey for year 2011-2012 revealed that more than 20% of rural households that fall into the definition of farmers had their income levels below the poverty line� This figure gives us an acute sense of the situation prevalent in the rural economy and inequality that prevails in the entire agriculture and allied activities ecosystem in India� The situation worsened significantly post the 1991

reforms where relative income of cultivators with respect to the relative income of non-agriculture in fact worsened significantly� Figure 1 shows that there has been a deterioration of the ratio of income of cultivators to the income of non-agricultural workers� Chand and Parappurathu (2012) mention low level of absolute income, large disparity between income of cultivators and non-agricultural workers and a sharp slowdown in the growth rate of agricultural output is largely responsible for this agrarian distress resulting in a sharp increase in farmer suicides since 90s�

Figure 1: Ratio of Income of Cultivators to Non-Agriculture workers

0.35

0.33 0.32 0.32 0.3 0.31 0.3

0.28

0.25 0.24

0.2

0.15

0.1

0.05

0

Source: Authors estimates using NSSO and CSO

Thus, there is an urgent need to augment incomes of cultivators to ensure that the prolonged agrarian distress could be dealt with on a priority basis� Gulati (2016) mentions the task to double the income by 2022 be impossible and unrealistic� It is important to mention that the goal is not to double the agricultural productivity by the year 2022 but to double the real income of cultivators�

There is evidence for a divergence in the rate of growth of agricultural productivity with the rate of growth of income of farmers� In fact, Chand et� al� (2015) mentions that during 2004-05 and 2011-12 agricultural real income grew by 63% as against a 34% increase in agricultural productivity at


49

constant prices� They further mention that there was a 2�65 time increase in output in nominal terms, but the farmers’ nominal income tripled in the period of consideration� Thus, the goal of doubling of income within the stipulated period seems to be more plausible than what critics have argued on account of ambiguity regarding the focal measure of what is to be doubled� For instance, given technology, if we assume that the cost of cultivation goes down due to a policy level intervention then there would be an increase in nominal income from cultivation� In terms of real income of cultivators, it could be said that if agriculture’s terms of trade were to improve, then even if there was an increase in price support that was given to cultivators, then too the real income of the cultivator would increase� This follows from the fact that, if inflation was to be higher in agricultural commodities then the farmer receives a higher price for his produce and his nominal income increases significantly and if simultaneously the terms of trade of agriculture improved, that is, non-agricultural prices did not rise or rose at a small rate then even the real income will increase for the farmers�

There is a significant problem associated with estimates for real income for farmers as these estimates are not published by the CSO� A part of this problem is solved when one looks at the NSSO dataset where it has generated income estimates for agricultural sector based on its

‘Situation Assessment of Farmers 2003’ and

‘Situation Assessment of Agricultural Households

2013’� Unfortunately, the two estimates in these

surveys cannot be compared as they don’t have

the same definition of farmers� Thus, in effect

there’s a gap that exists for data on farmers

income� This gap acts as a limitation in terms of

designing a policy to augment income� Lack of data

also restricts evaluation of performance of any

policy measures that may have been undertaken

in the past thereby restrictive objective study on

the subject of farmers income� Though there is

lack of official source of information regarding

the income of farmers, Chand et al (2015) provide

for estimates of total and per farmer income for a

period 1993-94 till 2011-12� Chand (2017) further

extends these estimates till 2015-16� What can

be clearly observed from these estimates is that

the real farm income per farmer has increased

till 2011- 12 after which it declined in 2012-13�

Post 2012-13 the real farm income per farmer

does witness some increase but only in 2015-16

did the real farm income per farmer increased

beyond the 2011-12 levels� It is worth noting is

that the number of farmers increased till 2004-

05 after which, it declined suggesting that during

this period, cultivation became less viable forcing

the poor and marginal cultivators to shift towards

other sources of livelihood�

Table 9: Farm Income in India

Year Total farm income of all farmers (Rs. Crore)

Farmers (Number in Crores)

Farm income per farmer (Rs)

1993-94 177954 303814 14�39 12365 21110

1999-00 335631 372923 13�88 24188 26875

2004-05 434160 434160 16�61 26146 26146

2011-12 1157128 632514 14�62 79137 43258

2012-13 1312730 596695 14�36 91416 41553

2013-14 1477159 602922 14�10 104736 42760

2014-15 1558223 597020 13�85 112507 43106

2015-16 1634625 598764 13�60 120193 44027

Source: Estimates obtained from Chand et. al. (2015) and Chand (2017)


50

Another interesting finding comes when one

looks at the real farm income of all farmers which

increased consistently till 2011-12 however, it

declined post that in years 2012-13, it improved

slightly in 2013-14 but not till the 2011-12 levels�

In fact, post 2012-13 the total farm income for all

farmers has remained below the 2011-12 levels�

What this implies is that the real farm income

per farmer is largely witnessing a gain due to

outward migration of cultivators as cultivation

becomes less lucrative or in extreme cases even

unviable� Given the current situation, it calls for

an immediate need to address the agrarian crisis

in a systematic manner� Evidence does suggest

income from agricultural activities is in fact

crucial towards addressing the agrarian distress

in the country (Chand, 2016)� Below we highlight

variables (or measures) that can impact income

from both farm and non-farm activities�

Increasing Income from Farm Activities

1. Cost of Cultivation

2. Agricultural Productivity

3. Total Factor Productivity

4. Diversification to Cash Crops

Increasing Income from Non-Farm Activities

1. Systematic shift towards non- cultivation and

subsidiary activities

2. Augmenting the Wage Income and other Rural

Employment Opportunities

Using International Markets and MSPs to our AdvantageIt has argued that due to ensuring food security

in India, the MSPs have not kept pace with the

rise in international prices of agricultural produce

over the years� This has been done to ensure that

in a nation where majority of the population are

net buyers of food grains, the rise in prices does

not impact the consumers� The divergence in the

domestic prices and international prices is largely

on account of protection that the agriculture

sector gets in terms of restrictions on import of

food grains to protect steep decline in domestic

prices that may significantly hurt the producers

of food grains� There’re also export restrictions to

ensure that food security situation of India does

not revert back to the 60s with steep increase

in domestic prices of food grains that will hurt

the net buyers of food grains� Thus, even though

there was a systematic liberalization of trade

for other sectors but agriculture, till date faces

huge constraints as far as import and exports

are concerned� The apprehensions about food

security are not that severe now given that India’s

production of food grains is far above the domestic

demand which implies that it may be beneficial to

export the excess produced� This understanding

stems from Standard Trade Theories which

argue that there are significant gains from trade

that can be made� There is a point of contention

here, and that is, given that India participates in

International Trade of food grains, it will result in

a growing convergence of international prices and

domestic prices� This convergence may be good for

farmers as international prices of few agricultural

commodities have largely been above the domestic

prices historically, but then, it may have a negative

impact on consumers of these food grains as they

may have to face higher prices� This convergence

comes with the assumption that India’s decision to

participate will not impact the international prices;

this assumption is not entirely correct as India is

a significantly large producer of food grains and

its share in total international trade is currently

small� Thus, India’s decision to participate would

in fact have an impact on the international prices,

thus bringing them down and reducing the prices

that our farmers may end up realizing� World

trade for agricultural commodities takes place

in a highly imperfect setting due to high non-

tariff barriers and even a small change in them

can have significant effects on prices due to high

elasticities; world prices often tend to respond

disproportionately with small changes in quantity

supplied in the international market� Keeping this

in mind with India’s significant position as far as

the leading producer of food grains implies that

an un-administered free trade policy may not be


51

the most rationale policy for the farmers at least in the short term� This implies that a significant rational or strategic trade policy for the agrarian sector needs to be put in� Quantity based tools could be used to administer the output that is available in the international markets while the MSP could be used to cushion the domestic prices in a strategic manner that can help in creating an ecosystem that gradually organizes the cultivation activity in a competitive set-up and make it viable over a sustained period of time�

RecommendationsLong TermIn the long term there is a need to treat agriculture as an enterprise geared towards economic efficiency and generating profit; In order to develop such a sector, it is important to strengthen markets, both inputs and outputs and break the current agrarian relations� To do that, we provide a series of long term structural measures that are important to strengthen the shift towards capitalist mode of production:

1. Land Reforms

2. Improving Access to Capital

3. Focus on Innovation in production technology (Incentives by granting patents etc�)

4. Encouraging private enterprises to venture into cultivation activities of high value exportable commodities

5. Strengthening the markets for future contracts to avoid uncertainties

6. Encouraging greater competition across the Production Process, especially in the logistics space�

7. Taxing income beyond a particular threshold from agriculture at a modest 5% and the tax revenue realized to be redistributed in the agrarian sector by way of extension of irrigation projects and research and development of seeds etc�

8. Gradual cut down in subsidies extended to the sector to encourage greater consolidation

and to ensure that the sector is compelled to be efficient and competitive without subsidies on a permanent basis�

Short TermOne important short-term measure should come in via legislation that or prohibits the purchase of food grains below the MSP and any such purchase if made must be penalized heavily� Considering the variables that impact income of farmers, we provide policy recommendations that can help double the farmers income:

1. Cost of Cultivation: A reduction in the cost of cultivation would directly result in an increase in the incomes of farmers� Thus, we need to evaluate what components comprise of costs as far as cultivation is concerned, broadly input costs such as wage bill, fertilizer and seeds costs, costs of irrigation and rent on land can be characterized as major sources of costs of cultivation� A long-term reduction in costs could happen by greater productivity or efficiency by using a better input mix of labor and capital and by reduction in input costs by greater competition in input markets� Given the tenancy relations in India, land reforms could go in a huge way in bringing down the costs of rent in India over the long term as we’ve already witnessed how exploitive such contracts have historically been and continue to persist� However, in the short term, a major source of reduction in cost of cultivation could come from reducing costs of fertilizers, seeds and irrigation by providing subsidies and/or extending the services/benefits of subsidies wherever necessary� It would be important to address the issue of capital here which is required to finance the production activity� To break the exploitive agrarian relations, it is important to extend formal sources of credit to tenants (be they be registered or not) and operators on leased in land� This will have two-fold effects; firstly, the cost of capital in terms of interest would be reduced for the farmers who borrow money and secondly, they would not be tied or required by the loan contract to sell their produce to the money lender at a


52

price less than market price� The latter point is significant as it has been found that these two factors have largely contributed to small farmers often finding themselves in a debt trap and their land-holdings have reduced significantly making it exceedingly difficult for them to employ modern agricultural practices to enhance the productivity of their land�

Due to restrictions in the reach of formal credit to small farmers due to lack of collateral and a declining number of rural branches, there is a significant problem in extension of the directed lending programs that have been initiated by governments over the years� The performance of microcredit is also not of the requisite standard to ensure it has a significant impact as far as financing of agriculture is concerned� In this context, we highlight a study undertaken by Singh (2017) where he contrasts alternative methods for providing or extending credit in the rural ecosystem� The alternative methods for extending credit that are evaluated in the study are TRAIL and GRAIL� Under these alternative mechanisms, an agent from the local community is appointed� The job of this agent is to recommend farmers with high productivity to banks so as to offer them low interest rates� The agents are provided an incentive structure by linking commissions that are received by them on the loan repayments� In the TRAIL system, a private trader or lender who has an extensive trading experience with villagers is appointed while under the GRAIL system, the local Gram Panchayat requested to appoint the local agent� They find that TRAIL is more effective than GRAIL in raising the output and it had raised the income of farmers by about 20% to 30%� The repayment percentage under all three methods has been 95% in their study� The conventional approach of extending microcredit was largely the least effective compared to the other two methods� The reason why TRAIL performed better was largely because it resulted in a better targeting of productive farmers and the structured incentives resulted in farmers being motivated to improve farm performance� Thus,

these results indicate that institutionalizing the appointment of private commission agents by formal lending institutions can go a long way to increase greater financial inclusion and ensuring that the cost of access to capital comes down for the marginalized farmers�

2. Agricultural Productivity: Agricultural productivity is critical to increase the agricultural output as the demand for land for non- agricultural uses increases� Therefore, augmenting agricultural productivity is important to ensure the agricultural output increases as the land under agriculture decreases over time� Productivity of most crops in India is significantly low compared to the world average (with the exception of Wheat)� In fact, productivity levels are largely low compared to the agriculturally advanced countries� Even within the country, there is significant variation due to significant differences in the total area under irrigation� There is even some variation with states that have similar irrigation coverage� At the aggregate level, it has been reported that per hectare of productivity of all crops taken together was Rs� 56,510 under largely irrigated conditions compared to Rs� 35,352 under largely rain fed conditions during biennium ending 2011-2012 (Chand, 2017)� This suggests that extension of irrigation services does have a significant impact on the agricultural productivity and thus income of farmers from cultivation activities� Variation in productivity at the same irrigation level of irrigation and the lower yield compared to international average is largely due to low adoption of improved technology thereby suggesting that an unprecedented widespread movement for adoption of improved technology, development of seeds and technology for improvement of agricultural productivity and extension of irrigation measures would be required to significantly increase the agriculture productivity�

3. Total Factor Productivity: Total Factor Productivity is an important variable that


53

captures the output growth that is largely

attributed to advancements in technology,

skill and available infrastructure� As is

evident, TFP would be augmented once there

is a policy intervention for development

of improved quality of seeds, extension of

irrigation facilities and widespread adoption

of modern farming methods�

4. Diversification to Cash Crops: The clustered

farming approach mentioned in the budget

is a step in this direction but to optimize the

strategy, it would be important to link it to the

soil health card scheme and identify clusters

where cash crops could be grown across the

country� Post undertaking such a nation-wide

study and identifying places fit for cultivation

of various cash crops, a mechanism on the

lines of MNREGA (where it is the governments

duty to provide employment) can be

created whereby the Panchayats or District

Administration can be made the nodal agency

for organizing the clustered farming approach

within their districts� Shift towards cash crops

can immediately increase the realization of

prices augmenting the income of the farmers

within the next two sowing seasons thereby

delivering quick results if implementation

bottlenecks could be addressed in adequate

time�

5. Systematic shift towards non- cultivation

and subsidiary activities: According to the

Situation Assessment Survey 2002-03 of

NSSO, 40% farmers indicated a preference to

quit farming if they had the choice� According

to NSSO, workforce in agriculture sector

declined by 34 million between 2004-05 and

2011-12� This decline suggests that cultivation

is not a lucrative proposition for farmers,

especially for the younger section of the

population� As a result, there is a need to shift

people towards animal husbandry and other

agrarian activities� The present budget does

focus on this aspect and makes the necessary

allocations along the allied activities and the

supply chain of agrarian economy�

6. Augmenting the Wage Income and other Rural Employment Opportunities: As mentioned before, Indian agriculture supports the livelihood of a substantial section of the population and this heavy dependence on agriculture as a source of livelihood that makes the per farmer income from land substantially small� As seen with the data presented in Table 9, there has been a reduction in the number of farmers over the years but there is still a need to create substantial income opportunities outside the agrarian sector� The government has given this a renewed push by increasing the allocation for food processing industries and by committing to promote specialized agro-processing units� It is important that these units come up in rural areas to ensure that they can create rural employment� The extension of irrigation facilities and other development activities can also create short-term employment opportunities for unskilled workers; however, for long term employment government needs to focus on merging the skill development initiative with rural industry units and access to credit to promote small and medium sized enterprises in the rural economy�

7. Strategic participation in International Agricultural Markets along with a rational price support system: As indicated, a strategic trade policy is needed to maximize the gains that a large food grains producer like India can make by participating in the international market� There is a need to create an institution that will regulate the quantity that is exported or imported for major food crops using quantity restrictions� The regulator will modify these restrictions on a dynamic basis to ensure there is constant adjustment of prices and quantity that maximizes the gains that India will make by participating in International Trade� This institution will also be tasked with the responsibility to connect farmers- especially the small and medium ones with international markets by providing the farmers price and quantity quotes using the E-Naam platform�


54

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15�

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99.

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analysis of farm income in India, 1983–84 to 2011–

12� Economic and Political Weekly, 50(22), 139-145.

9� Chand, R�, & Parappurathu, S� (2012)� Temporal and

spatial variations in agricultural growth and its

determinants� Economic and Political Weekly, 55-64.

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agriculture�

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Raising farmers’ income by 2022� The Indian Express.

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Changing Village in India: Insights from Longitudinal

Research. Oxford University Press.

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Dixit, A� K� (2015)�

14� Report on assessment of quantitative harvest and

post harvest losses of major crops and commodities

in India� All India Coordinated Research Project on

Post-Harvest Technology, ICAR CIPHET�

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M� (2008)� Precision farming technology, adoption

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poor environments� Agricultural Economics Research

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from Three Selected Villages in India�

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Growth� Economic and Political Weekly.

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55

Harsh V Verma1 and Ishita Varma2

1 Professor, Faculty of Management Studies, University of Delhi,

Email: harshverma@fms�edu2 Assistant Professor, Dr Bhim Rao Ambedkar College, University of Delhi,

Email: ishitavarma2@gmail�com

Economic Democracy through Democratized Economics: From the Perspective of Marketing

Democracy is a form of rule where people are voted into power to rule by the process of election� This stands in direct opposition

to a form where rulers either seize power by brute force or get power by virtue of inheritance or theocratic command� The Indian state has evolved into a constitutional democracy after independence prior to which it was ruled by kings, emperors and foreign power� Fundamental to a democratic system is the distribution and devolution of power to citizens� The citizens get to participate in governance indirectly by directly electing representatives to the position of power in government� The governments establish rule through various institutions of governance� Democracy in this sense is an invention in the sphere of politics by which a paradigmatic shift of power is achieved but often the democratic forms of governments operate as alibi for rule by a few cartelized socio-economic groups�

Instrumentality Systems and products are created for some purpose� Just as a pen’s effectiveness can be judged by its instrumental role in being able to write, democracy as a political instrument must be judged accordingly� Business organizations are created for the purpose of wealth creation through customer need satisfaction� The purpose does not and cannot reside within a system or object� Accordingly, effectiveness is judged from an outside perspective which constitutes the

fundamental or supreme area of performance� A business organization or process or product or an employee can be very efficient but grossly ineffective� Efficiency is an internal metric which answers the question, ‘How are you doing?’ but effectiveness seeks to answer a more fundamental question, ‘Are you doing right?’� Efficient democracy does not automatically correspond to effective democracy� Holding elections and getting higher voting percentage may superficially indicate proper functioning of democracy but miserably fall short on delivery on metrics of performance for which democratic system is invented�

The devolution of power to people is premised on an assumption that systems like nobility or dictatorship use position of power to further their self-interest� The binary pair of ruler and ruled signify two different constituencies� These constituencies by their very nature have different interests and priorities� The ruled constituency wants delivery on metrics such as economic well-being and freedom but the ruler may be reluctant to share economic resources� These clashes of interests often define binary pairs in the world of economics, business and politics� In the world of business, the shareholders, society, suppliers and consumers are constituencies which seek their ‘pound of flesh’ and want to push the business system into a state of conflict and disharmony� For instance, the customers expect a business to offer more product options to choose from but


56

the operations department disdains the idea for

the complications it causes on processes�

The virtue or vice of ‘self-interest’ motivates

tyrants or autocrats or the elected to deploy

their power for the perpetuation of self-centered

policies� The corruption scandals and amassing of

huge wealth by leaders provide testimony to this

reality� This outcome defeats the very purpose

democratic system was invented for� Hitler

mobilized state machinery in pursuit of what in

his construction was correct notwithstanding

enormous costs and consequences� The East

India Company in its rule over Indian Territory

employed power in aggrandizing its own interests

notwithstanding its effect on people� The

Company employed capital and trade policies as

instruments to perpetrate economic exploitation

in pursuit of its own betterment� By this process

the artisans, cultivators and producers were put

to huge economic disadvantage� The nobility in

France was engrossed in their decadent lifestyle

while commoners suffered severely in their daily

existence� What did the princess say upon learning

that the peasant did not even have bread to eat,

“Qu’ilsmangent de la brioche” or ‘give them cake’�

Achieving harmony and balance when parties in

a social system or dyad basically diverge in their

agenda is a huge challenge�

Democracy is not an end in itself� Rather it is

an instrument of a particular type of governance

where citizens are enfranchised to elect people to

represent their interest� In an ideal situation, the

elected representatives must promulgate policies

in the promotion of collective good� It is in this

construction, democracy is very aptly described

by Abraham Lincoln as government “of the people,

by the people, and for the people�” The Indian

democracy has been of the people and by the

people but it is contestable whether it has been

‘for the people’� A major section of population

although politically enfranchised has remained

economically deprived and disenfranchised� The

regularity and fairness of electoral process is

something of an achievement but has it successfully

yielded rewards for people as it ought to have

done� Often democratic systems degenerate into emblems of mere democracy but the system is defended on technical grounds of ‘free and fair’ process and higher voting participation� This is something debatable�

When a democratic system fails to enfranchise people economically it reduces itself into something made of paper and on paper� Although freedom to participate is central to the concept of democracy not it is mere means to promote collective good and welfare� The concept of well-being is the true hallmark of democracy� The concept of well-being is multi-faceted which includes aspects like honor, freedom and material wellness� India credits itself for being the largest democracy on the face of earth and takes pride in conduct of elections where millions of people participate in the electoral process� This indeed is creditable but a large section of Indian population though politically empowered remains on the fringes of economic dynamics� The political democracy in an ideal state should create economic democracy� Economic enfranchisement is essential for a democracy to be real� Even after close to seventy years of independent functioning democracy, a vast section of people are forced to make both ends meet in less than two dollars a day� Economic equality of citizens is important for the proper functioning of democracy� The economic wealth can be translated into political by and exercise of control over public discourse (Page and Gilens 2017)� At the supply side, the system can degenerate into McDonalds’ like situation and bouquets of candidates may differ marginally and political choice may be rendered superficial� On the demand side, people though free to choose are unable or unwilling to exercise choice correctly� There can be no real democracy without economic democracy and this is not possible unless production is oriented towards human and community needs rather than private accumulation (Disorder, 2018)� Laski (Sherzai 2012) asserted that political equality is just a myth unless it is accompanied by economic equality� It implies that a minimum standard of income be assured to all�


57

Figure 1: Instrumentality of business and

government

People Participation and EngagementThe concept of freedom to choose sits at the heart of

proper functioning of both market and democracy�

This choice is considered sacrosanct, an inviolable

virtue in democracies� Our Constitution provides

the right to vote to every citizen eligible as per the

Representation of People’s Act, 1951� Each voter

is entitled to elect his or her representative� This

process is similar to when consumers engage in

exercising their choice in a supermarket� But the

exercise of choice and choosing right is not one

and the same thing� How many of consumers end

up putting products or brands in their basket

which are not fit for the purpose they are bought

for� That is, the chosen products ill-match with

the ends they are chosen for� The same may be

true for a democracy� The citizens participate in

electoral processes and exercising their franchise

but end up electing people to power who may

not suited for the job� The wisdom dawns later

leaving the voters with the knowledge that they

are not vested with any mechanism to escape

consequences� Most democracies do not give

generous unconditional return or exchange

policies as Business Corporations often do�

Christopher Maboloc (2015) writes that no one

who loves his country would want to put a corrupt

or incompetent politician in power the same way

as someone who loves his spouse would want

a magician in the delivery room� But they do by

ignorance or due to intelligence breakdown or for

the want of choice

The contemporary era is defined by choice (Rosenthal 2005)� This choice paradigm is not limited to market; rather it is also embedded in the democratic system� The lack of choice is constraining� The ability to exercise choice gives a sense of control, an intrinsic motivation� It also makes one feel psychologically elevated even if the choice is illusory (Iyengar and Lepper 1999)� This sense of control and autonomy is purely psychological� In the real sense of making choices, it may work in the opposite direction� Choice is not always good as sometimes it can paralyze the decision maker and hurt decision making ability� It can manifest in decision avoidance and choosing an easy option but not the best one� In this context, Schwarts (2004) observed that autonomy and freedom to choose is important for human well-being but Americans don’t seem to benefit from it psychologically� This logic if applied to democracy may also hold true� Merely being democratically autonomous and given opportunity to select a representative is technically fine for the working of democratic system but it may not really lead to optimal choices especially when ballot contains endless names and symbols� Availability of too many options on the ballot box prima facie may indicate healthy functioning democratic system but in reality it may defeat the very purpose it signifies�

Schwartz suggests that strategy to make a sound choice involves multiple steps� It all starts with what a consumer wants or what goals one wants to fulfill and relative importance of these goals and comparing these with the available options before making a final choice� Consumers have two approaches, one is that of maximizing and the other is ‘satisficing’ (Simon 1956)� Instead of achieving the best result or choosing the best alternative, the ‘satisficing’ involves selecting an acceptable option� This is done because of ease and familiarity� In the consumer choice context, often products or brands are chosen for their adequacy of performance� Finding out a perfect solution is tough and time consuming� Therefore the decision task is solved with a limited cognitive effort� In the context of election of representatives,


58

reaching an optimal choice is unlikely to happen unless electorates’ goals are specified and matched objectively with competence of the candidates� Cognitively it is going to be burdensome and complex� It is highly likely that people limit their search to a few candidates and decide among them� This may not be an optimal method to exercise choice in both democracy and markets�

There are two issues here� The first relates to the autonomous decision maker and the second pertains to the market� The functioning of democracy and economic systems can get can get compromised in the absence of inability and unavailability� The economic system of perfect competition derives its perfection from utility maximizing rational decisions in pursuance of self interest� This is made possible because free and perfect availability of information� Mere information availability does not translate into good choices� Correct choices are preceded by information processing� The information processing perspective establishes how decisions are made from cognitive perspective� This perspective includes attention, memory and causal reasoning (Oppenheimer and Kelso 2015)� Buying of a product or voting for a candidate is similar in so far as decision making is concerned� One of these is located in market space and the other belongs to political arena� The decision situations require separating the best course of action among different courses by application of cognitive abilities�

Decision making can be visualized as a sequential or linear process comprising of different stages� Two major models are those of Nicosia (1966) and Engle et al (1968) and Howard and Sheth (1969)� � These models demonstrate the role of information, perception, and evaluation in arriving at a decision although linearity in these models is often questioned as the real process may be concurrent and skip some stages ((Brinberg and Lutz, 1986 and Phillips & Bradshaw, 1993))� The gaps may creep in decision process and create distortions� The first step is ability to recognize the problem or opportunity� Is voting an opportunity or a job? The low voting rates may

be indicate that people see voting as a job or task rather than perceiving it as an opportunity to bring about a desired change� The voter indifference and abstinence arise from lack of appreciation of the role they play in polity� Those who move to next stage must ideally gather information about candidates and political manifestoes� This is a prerequisite for taking right decisions� But people often do not have adequate or correct information which precludes them from making correct judgments� The information deficiency further compromises effectiveness of the whole electoral process as voters are neither able to frame their requirements correctly nor have correct knowledge of political brands� The core considerations essential for making the choice are substituted by peripheral considerations like identity� The choice therefore is often poorly informed� Education is in this context is the biggest enabler� It is the fundamental building block for the proper functioning of a democratic system� Education is essential for cultivating a sense of discernment without which democracy can get reduced to mere voting celebrations in which ‘nothing’ worthwhile happens with a regular periodicity� Education had deep and profound influence on politics� As Einstein observed ‘Education is not the learning of facts but training the mind to think’� It can alter the structure of politics and the way citizenship is exercised (Behar 2014)�

Empowerment, Entrepreneurship and MarketingPolitical empowerment has little value unless people are enabled to exercise their franchise correctly� One of the key enabling conditions is that people are economically enfranchised� Like democratization of voting rights, the economy must also be democratized� When people who are brought into political equation remain outside the economic equation, the democracy degenerates into mere democracy� Some other kind of governance operates in the garb of people’s governance� People left out of the economic spectrum generally are not able to move up the ladder of prudence� The vicious dependence on


59

others for economic survival severely compromises political choices�

The way a country approaches the issue of providing means of economic engagement has long term impact on the way democracies operate� Spending on education enjoys a relationship with income levels� Education transforms and this transformation assumes central priority when people are removed from employment dependence� Entrepreneurs are instrumental in instigating a spiraling change� They identify wealth creating opportunities and seize them� Some of prime examples are Bill Gates, Steve Jobs and Mark Zukerberg and in India these come in the form of Oyo, Snapdeal, Flipkart and Zomato� Besides the economic history of many developed countries including that of Japan and the USA provide testimony to the role of entrepreneurs (Dhaliwal, 2016)� The role of capital is hotly debated but the transformative role of entrepreneurs is largely ignored� Capital has little to achieve without the presence of entrepreneurs who participate in production process and create economic democracy� In fact, these entrepreneurs sow seeds of next generation of big industries�

Broadly people engage in an economy in two ways, employment and self-employment� Employment is an agreement to work or provide services for a payment� Millions of people work in business corporations or other government offices� Employment model is based on a distinction between two roles of employee and that of employer� Employers exist in the form of big companies like Tata or IBM� Employees typically depend on employers for jobs and hence their economic survival� Employers typically directly undertake risk and create wealth generating instruments which provide platform for employment for others� Schumpeter visualized the role of entrepreneurs in creating opportunities for economic development by initiating economic activities by their entrepreneurial instincts� They create businesses by seizing opportunities which in turn start positive chain reaction� Initiative

truly defines entrepreneurs� Entrepreneurs drive economic activities upwards and play significant role in development process by initiative, innovations and dynamism (Sayigh 1962)� Two things that are necessary for economic development are entrepreneurship and capital�

At the heart of well being of people is the economic activity� It is not possible to create well being without engaging wealth generation activities� Marketing in this context provides important linchpin� Marketing discipline provides framework for linking people’s need and means of achieving them (Kinsey 1982)� Marketing is a social process by which consumer needs and wants are identified and fulfilled� At the supply side of marketing, entrepreneurs create investible surpluses and at the demand side consumers get what they want and enjoy better standard of living� The market forces will transform life around the world (Steade, 1975) and it is marketing alone that can push world toward reduced inequalities (Kinsey 1982)� It is Wroe Alderson (1968) who half a century ago pointed out the functions of marketing in which he stressed that marketing brings new products to the market and brings new people into the markets� It is the latter function which plays role in economic development by which people are brought into the market economy�

Underdeveloped economies suffer due to the absence of the crucial factor of marketing and this absence leaves them unable to organize economic efforts and energies and prevents them from coming bring them together with resources, wants and capacities to transform them into creative cycles of organic growth (Drucker 1958)�Mere setting up of the manufacturing units is not sufficient� It must be accompanied by knowledge of whether product or service has demand� It is a knowledge and approach issue� Mere mobilization of resources is not sufficient to put them to work because often these efforts are impeded by attitudes, beliefs and life style� Marketing in this context is an important resource in melting these both at the supplier and demand ends�


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Economic Democracy and Democratized Economic ActivityIndia stands apart as a young country in

comparison to a vast number of ageing countries�

Currently India is sitting on a latent economic

resource comprising of huge young population�

In comparison to many countries, India has the

potential to reap a major demographic dividend as

it has the median population age of 27�3 years in

comparison to 35 years for China and 47 years for

Japan (Singh, 20017)� This availability of productive

population is a resource if properly harnessed�

Mere availability of people in the productive age

is not sufficient to reap demographic dividend�

Their active involvement in productive process is

the key�

The paucity of opportunities for engagement

in economic activities can lead to disaster�

People in a younger age group do not constitute

productive capacity per se� The potential hidden

in them can only be economically useful if they

are transformed into a productive resource� This

necessitates formulation and implementation of

transformative policies� This transformation in

the form of schooling and skill training can have long gestation period� The current productive capacity is determined by investments made in preceding years� India in this regard is precariously positioned� It has a vast population of young people who are invested with right education and skills� Their transformation may take years� The country needs to channel them into productive path with lesser payback period�

The paradigm of employment seeking through jobs is feasible when the size and number of employment providing businesses increase� The technological advancements and next industrial revolution fuelled by robotics and artificial intelligence have been fostering industrial growth without employment� With regard to the cutting edge technologies, India is poorly positioned� It does not seem to have right human capital and skills needed for higher order jobs�

One of the examples is Delhi Metro which has been gradually opting for automatic vending machines and driverless trains� The car manufacturing jobs on assembly lines are eaten by advanced robotics� The question is what options do we have in the absence of capacity to participate in front end of technology? The paradigm in this context must shift from job seeking to job creating with low or immediate payback periods� The ray of hope lies in entrepreneurship� The policies must create conducive environment for starting ventures, especially at the bottom of the pyramid where education and skill deficiency are likely to prevail� In this regard, the case of Sao Joaquim in the Southern Santa Catarina is illuminating� This was poor region of small producers with very low development indicators� The people here waited for some outside large enterprise or government project to arrive for their development which did not happen� Instead some residents chose to solve their own problems by opting to grow fruits based on climatic conditions� By organizing themselves and forming partnership with research institutes these moved charted their own course of development ( Dowbor 2018)� The change of attitude from dependence on others to autonomy is at the heart of this structural shift�


61

The participation of people in wealth creation has to be democratized� The process of getting more people on board economic journey must focus on people from all sections and at the bottom of the pyramid� What is desired is that entrepreneurship should be democratic in the sense that everyone should be allowed to participate� While conditions may be conducive for large enterprises to grow and prosper, micro and small enterprises, and even medium enterprises may be left out as they may not have sufficient resources to cover costs to operate and to reinvest to grow � However, for a country like India, it is crucial to realize the importance of these enterprises� MSMEs are currently over 7 crore in numbers which create around 12 crore jobs in the economy across varied enterprises and these tend to have high labour capital ratios (Panda,2018)� While a large potential for job creation exists in these, while turning to credit, these enterprises may be able to obtain only limited resources or may have to rely on informal sources of credit which can stifle their expansion and growth�

Autonomy through MUDRA, Start Up India and Stand Up India

Indian economy is unique in many ways from its Western counterparts especially with respect to geographically wide scatter and a large number of people engaged in economic activity� Consider the case of retailing; India is home to more than 12 million retail outlets which are highest in the world with an average size which is probably the lowest (Pugalanth, 2013)� Majority of these retailers operate at very small scale often called ‘mom and pop’ stores or the ‘hole in the wall’ shops� The same holds true for enterprises� The word ‘enterprise’ is used here to refer to enterprising individuals who undertake economic activities at a very lower level of subsistence� It is these people to be lifted up but are unable to because of unavailability of very small amounts of capital� The developing economies have their own unique structural characteristics� Surgical change in these characteristics is difficult and has disruptive effects� Therefore, the focus of attention has to

shift to encouraging people to become micro-entrepreneurs� This is likely to shift burden away from job seeking and promote multiple positive effects: economic upliftment, psychological confidence and sense of achievement and finally social class movement�

Prime Minister Modi led NDA’s Pradhan Mantri Mudra Yojana (PMMY), Start Up and Stand Up India are out of box bottom up approach to launching people of India on the path of social and psychological autonomy through economic democratization� MUDRA in this sense is not an just economic scheme like many others of earlier governments� It is an apparatus of psychological and social change directed especially at the marginalised located at the fringe of social structure� It in this regard, MUDRA is a scheme that seeks to transform Indian democracy from being ‘mere democracy’ to the real one� Casting a vote every five years gives a falsified sense of autonomy without altering the economic and social coordinates of people� In this sense MUDRA is a game changing apparatus� It seeks to institutionalise micro finance availability in order to foster entrepreneurship and making it more democratic�

The early indicators available are encouraging� A study by Kumar(2018) found that since the launch of the scheme till 06�07�2018 over 13�16 crore loans had been sanctioned for an amount of Rs� 6�19 lakh crore� This credit promotion through MUDRA to micro enterprises has many positive impacts� Most notably, there has been a boost in growth and employment in the informal business sector� It is also found that 55% of the borrowers are from SC/ST/OBC category and these PMMY loans have played a crucial role in extending loans to women� This way, social objectives are also getting fulfilled by PMMY�The loans according to the government, 4,53,51,509 number of loans were sanctioned during the financial period 2015-16� While Rs 228144�72 crore was sanctioned, Rs 220596�05 crore was disbursed (The Indian Express 2018)� These loans through higher growth and employment promotion can increase income


62

levels of the deprived sections of the population� The higher income levels have the power of translating into higher living standards for the people where people can raise their spending on education and this higher education can in turn lead to higher income levels� This way a virtuous cycle of higher education and income levels can be attained by not solely relying on supply side initiatives of educational provisioning by the government but higher educational levels can be attained through higher demand which can stem from entrepreneurship development� The policy is seeking to transform India by unleashing the spirit of enterprise to the ends of autonomy and empowerment�

Concluding RemarksSuccess of democracy is fundamentally based on people participation in electoral process� But mere act of voting is not sufficient for translating democracy into ‘government of people, by the people and for the people’� Mere enfranchisement may mask some other form of government as democracy� Instead people must be educated to be able to exercise their political choice correctly� The wisdom to make political decisions correctly is influenced by education� In order to be able to invest in education the economics needs to be democratized� The policy of employment seeking as an alternative to entrepreneurship preempts building of both financial and political autonomy� Mudra Yojana seeks to achieve this by focusing on a large section of Indian society who operates at the economic fringes� It launches them towards real democracy by unleashing spirit of enterprise in them by breaking the mould of job seeking to job providing� The loans provided under the scheme have potential for higher growth and employment promotion and can increase income levels of the deprived sections of the population�

It is well known that education enhances the stock of human capital that serves as a production factor while from an individual’s point of view education yields economic benefits in the form of higher wages (Rani, 2014)� This way integration of people into the democratic system of the economy can

take place as this higher education, which works through the channel of higher income through entrepreneurship and job creation, will improve their capability of making informed decisions� Along with this, even the income earning capacity of individuals can be democratized where the marginalized sections will be uplifted�

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15� Kinsey J�, (1982) “The Role of Marketing in Economic

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Dr. Rajeev M.MAssistant Professor, Department of Social Work, School of Social

Sciences, Central University of Rajasthan, Ajmer, Rajasthan�

Dr. C.VinodanHonorary Director, Institute for Contemporary Chinese Studies (ICCS) & Associate Professor, Centre for Strategic and Security Studies, School of International Relations and Politics, Mahatma Gandhi University, Kottayam, Kerala�

Sunita KumariMSW, Central University of Rajasthan

The Effect of MGNREGA on Social, Economic and Political Empowerment of Women in Rural Rajasthan, India

AbstractAn analysis of women’s social, economic and political empowerment programmes in Rajasthan through MGNREGS will contribute to the recommendations about how a national level programme can benefit to the targeted group and policy-making process of any development programmes� The significance of women participation in all spheres of MGNREGS needs to be studied and documented� Here the research the article m focus on understanding the various factors supported to the socio-economic and civic empowerment of women through this field-based programme in the State of Rajasthan� The recent report of MGNREGS claims 69% participation rate of women in Rajasthan (MGNREGA, 2016)� The state claims to have given reservation to women in local Panchayati Raj institutions� But still, various exploitative practices are prevalent in the state� In terms of various indicators, the state ranks among the poorest performing state� Women health in the state remains a serious concern� Due to the entrenched patriarchal system, to date women emancipation remains a daunting task� Understanding the ground realities and impact of MGNREGS on women in socio-economic and political space, the paper will bring a new perspective which will help to understand the importance of such policies and regional differences in terms of achieving desired outcomes�

Keywords: MGNREGS, women empowerment, Panchayati Raj Institutions

IntroductionMGNREGA is undoubtedly one of the revolutionary

steps taken by the Government of India in

the post-independence period, towards legal

enforcement of the Right to Work to enhance

‘livelihood security�’ The year 2015 marks the 10th

anniversary of the Act� Though seemingly limited

in its scope (100 days per household per year), the

Act emerged as a powerful tool of empowerment

for the rural population of India� It provided vast

opportunities for the rural poor not only to escape

from the decades-old poverty and miseries of

social stratification but also to organize and fight

for similar rights like the “right to social security�”

It also helped to empower woman by guaranteeing

them relatively autonomous income-generating

employment schemes�

The implementation of the Mahatma Gandhi

NREGS has raised a formidable challenge to the

existing institutional framework as well as to the

elected representatives, officials and workers

to effectively plan, organize and execute a large

number of works across the State in order to work

towards the creation of assets that contribute

to livelihood security and regeneration of the

natural resource base (TISS, 2011)� The response

from the State of Kerala, in terms of procedural

clarity for programme implementation, has been

remarkable, as it capitalized on its achievements

in implementing democratic decentralization over

the past decade� MGNREGA entitles 100 days


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employment to rural households who volunteer to do unskilled manual work� It promotes gender inclusivity, equal wages for men and women, and provides on-site childcare� Women’s participation in the labor force is quite low and has been falling over the last few years� The female to male ratio is only 0�36� This ratio difference is intensify by the lack of choices that women have to engage in paid work related to work type and location, patriarchal gender norms, and the undue burdens of unpaid care work that women bear�

Across India, there are massive social cleavages, and gender inequality is prevalent in sectors including health, education, and literacy� There are several national and international NGOs and civil society actors working towards enhancing women’s rights, but the proportion of those specifically targeting women is low� The policy space available to organizations working for women’s empowerment is quite restricted� However, research and advocacy on women’s rights and work are on the rise, in addition to several government programmes to enhance the empowerment of women� In Rajasthan, the overall backwardness of women in all sectors of development is comparatively high, but the implementation of MGNREGS in the State created several changes in the life of the women folk in the State� So the current research will seek to learn from the experiences of women benefiting from a state-led women’s empowerment programme in Rajasthan� The present study is focuss on understanding the various impact of MGNREGA Scheme on the socio, economic and political spheres of the women in the selected areas of Rajasthan�

NREGA stands for ‘National Rural Employment Guarantee Act (2005) enacted on September 2005 & brought into force with effect from February 2006 in 200 most backward districts; covering all districts of the country within next five years� The objective of the act is ‘enhancement of livelihood security of rural household by providing at least one hundred days of guaranteed wage employment in every financial year to every household whose adult members volunteer to do

unskilled manual work�’ Put, the primary objective of the act is ‘enhancement of livelihood security in rural areas by providing 100 days of unskilled manual work’ with the auxiliary objective being: Generating productive assets, protecting the environment, empowering rural women, reducing rural-urban migration, and fostering social equity(MICARVAAN, 2008)�

Implementation of MGNREGA has contributed to very high levels of women empowerment, particularly in the following aspects that as women’s groups organize the work, the gender perspective gets built in automatically, for the first time equal wages are paid and this has boosted the earnings of women� As the bank deposits are increasing, the intra-household status of the woman has also been improving as she controls substantial cash resources and withdrawal can be only on her decision� There are wide variations across states, within states and across districts in the share of work days going to women� In the national scenario, the participation of women is a concern; it increased significantly from 40�65 percent in 2006-07 to 47�72 percent in 2010-11� Figure 1 shows the participation of women in major states during 2010-11�

There are many other studies done by scholars and researchers� Khera (2011) provides a comprehensive work on MGNREGS with multiple levels of analyses offered by scholars from Jean Dreze to Clement Imbert and John Papp which give a detailed account of the ‘battle for employment guarantee’ in rural India� Going beyond the controversies that have characterized much of the MGNREGA debates, the scholars through this volume present an informed and authentic picture of the ground realities — all essays based on field studies of MGNREGA� A wide range of issues is investigated such as entitlement, corruption, people’s perceptions of MGNREGA, women’s empowerment, mobilization of unorganized workers, and socio-economic impact of NREGA� A comparative analysis of the challenges and successes in the implementation of NREGA in different States, including Orissa, Himachal Pradesh, and Rajasthan�


66

Source: www.nregs.in

There are various explanations for the varying

participation of women workers under the

MGNREGS� Factors that have encouraged women

workers’ participation include the nature of the

job not requiring special knowledge and skill

(Krishnaraj et al 2004 in the context of MEGS);

outmigration of male family members (Bhatty

2006; Mehrotra 2008; Talukdar 2008); the

employment opportunity being available at the

doorstep (Bhatty 2006; Khera and Nayak 2009); a

tradition of rural women working in others’ fields

(Narayanan 2008); the provision of equal, non-

discriminatory wages (Sudarshan 2008; Khera

and Nayak 2009); and innovative experiments in

implementation like the female mate system in

Rajasthan (Khera 2008), synergisation of NREGS

with Kudumbashree in Kerala (Vijayakumar and

Thomas 2008), and in Bihar, gender differential

tasks for uniform (minimum) wages (Pankaj

2009)� Ratna� M� Sudarshan (2010) study focused

that improved women participation in MGNREGA

enhanced from the active participation of NGOs

and better wage payment of scheme which is

above the prevailing market wage� The study by

Sudha Narayanan (2008) pointed out that the

provision of shade, food and other basic amenities

for young� Sudarshan (2011), while examining

women’s participation in MGNREGS in selected

areas in Kerala, Himachal, and Rajasthan, has

found that the scheme has succeeded in bringing

together large numbers of women into paid work,

many of them for the first time� The studies

mentioned above represent only a cross-section

of a vast array of literature on different aspects of

the MGNREGS�

The Times of India (2016) “Across Rajasthan, 80-90% of the workforce under MGNREGA comprises women� This has brought about a massive change in the mindsets of people here and has instilled new-found confidence in women,” (Barefoot College and Central University of Rajasthan, 2015)� So much so that these women now open and manage their accounts in banks or Page 17 post offices, and some of them are in the process of gaining a rudimentary education� “The women oppressed so far, have now become economically independent-earning their living and also deciding how to spend it, unlike earlier, when the men would take all decisions� Even their children’s health is improving given that they can now choose to spend their money where it’s needed�

Aim and Objectives and Research Questions of the Study

The primary goal of this project is to study the effect of MGNREGS on social, political and economic empowerment of women in the rural areas of Rajasthan�

1. What is the impact of MGNREGS on social empowerment of women in rural areas?

2. What are the political impact and participation of women through MGNREGS programme?

3. What are the factors that lead to assess the economic empowerment of women through MGNREGS?

4. What is the influence of the programme in poverty reduction, social and economic empowerment of marginalized groups and women?

5. To find out the major challenges of the MGNREGA programme experienced by women in rural areas�

6. To analysis the living conditions of women before and after their enrolment under MGNREGA�

Study Location and Justifications While we look at the socio-economic and political scenario of the larger State in India, Rajasthan is


67

having one of poor performing state in terms of major health indicators including IMR, MMR, the participation of women in education, political institutions and other mainstream economic activities� The women from rural areas are facing multiple issues less income, literacy, dependency, gender, and caste issues� No major study has been conducted in the region to see if the problems of these women reduced after implementing MGNREGS which aims at empowering these rural women by providing paid employment�

Geographical Map of Kishangarh Block of Ajmer District, Rajasthan

Materials and MethodsThe present study is intended to identify the impact of MGNREGA on socio-economic development and women empowerment� The participants selected through purposive sampling from the area of Kishangrah Block, Ajmer district� Rajasthan� Kishangarh is known for its Marble work� Majority of the population is involved in seasonal agricultural activities and marble work during the off-season� Women, in particular, have no much opportunity except household chore� After the MGNREGS, many women have got the chance to get paid work� So it becomes essential to see whether such schemes are helping women in empowering them in different sphere of their life�

The research study will be a mixed method study where qualitative and quantitative information collected according to which qualitative data collected at the initial phase followed by quantitative analysis� The phenomena explored and

then explained through the research� Quantitative data substantiate the qualitative findings� The study conducted in the Ajmer District and the unit of the study is nearby villages in the Kishangarh Block, Ajmer district� The population of the study includes both male and female both who have involved the MGNREGA Programmes� And they worked in MGNREGA� Convenient sampling method was used to select only those people who are comfortable in responding� The researcher will take under 60 samples for the quantitative part of the study� In this study, the researcher used primary and secondary data� The primary data collected during the period from April 2017� Interview- In-depth Interviews conducted with the people will be affected in the MGNREGA� The interviews would be conducted in person so that they are comfortable in answering the questions�

Data Collection Instruments and Procedures:

Several data collection methods would adopt for the present study� A questionnaire for a quantitative interview and an interview schedule for a qualitative interview is prepared� Focused Group discussions carried out to analyze the perception of the beneficiaries and stakeholders� An interview guide prepared by the investigator for conducting qualitative interviews� The interview guide contained questions specifically related women empowerment in the areas of social, economic and political aspects� The qualitative interviews were conducted in the local language by the investigators and lasted for one to one-and-a-half hours� All the interviews were audio recorded and later transcribed for analysis� Appropriate quantitative and qualitative methodologies are adopted for analyzing and interpreting the data�

Results and DiscussionThe study indicates that the majority (49%) of the respondents belongs to 18 to 45 years of age group� And 33% of them belongs to the category of 46 to 60 years, and only 18% of them belongs to 60 and above years of category� This means that the majority of the respondents are at a young age� It is showing that the majority of the respondents are female� That is 85% of the respondents are


68

female, and the male respondents constitute 15% in the MGNREGA programme� Majority of (88�3%) of the respondents have APL card in the village� And 11�7% of the respondents have BPL card in the village� It may be added that in general, one or two persons were found to be earning member in the family� About 63% respondent is having two earning members in the family and 11�7% respondents 3 earning member in the family� MGNREGA work could be a big help for such families who are small or marginal farmers, depending mostly on the farming income, having Page 42 only one earning member� MGNREGA work could supplement their incomes and raise their standers of consumption� This study is showing 98% of people are known about the MGNREGA programme in the village and as time 2% of villagers not known about the MGNREGA programme� This study pointed out that the most important sources knowledge about MGNREGA is Gram Panchayat followed by Gram Rozager Shayak� Majority of 58% respondent they worked in the water conservation and 25% of respondent worked under the road construction� This study found that the majority of the families were spending increased income from MGNREGA after better food, children education, and health� 85% of respondents are not satisfied with the economic condition improved in the village, and 15% of respondents are satisfied for economic conditions are improved in the village� MGNREGA work they faced some problem like vehicle problem because of the working site in the village it’s 5 to 6 km far away in the village� And this time no vehicles are available for the people�

Through the MGNREGA in the village it’s helped for improved the economic condition in the villagers if yes then how, this was asked during the qualitative interviews� Mostly, respondents said through the MANREGA in our village economic condition is improved like in the villagers become received a job in 100 days they are an employee in the 100 days� Its economic condition improved as well as village development is also their like makes a road, pond, drain like that this is also improved the economic condition for the villagers� Some respondents said we don’t waste the time we do work and got money� Through the improved the economic condition it‛s helped for the good health

and education also� And 15% of respondents do not agree for these statements

Recommendations and ConclusionWomen’s participation in the scheme has enabled them to come out of their homes not only for work but to visit panchayat offices and banks, which was absent in the earlier days� This has elevated the women in society to a higher status of becoming income earning workers� Though there is an absence of an ample amount of studies on the issues of change in gender roles of the women employed on MGNREGS sites yet researches have noted on the increased confidence among women� Women remain confined to the household chores, occupation and in the formulation of social safeguard policy� There is a refusal to accept the dual role of women in the as caregivers and income earners in the family as a collective concern of the state� Since women remain as caregivers of the family, their comfort zone of the work area is near their home with flexible timings, etc� all of which are fulfilled by the MGNREGS� Women participation can enhance by appointing female supervisors on MGNREGS works and in conducting social audits� The provision of food for women at the work sites creates enthusiasm among women to participate in MGNREGS works� Also, it is important to add some minimum social security such as health insurance� In other words, MGNREGS work needs to move towards quality employment�

The central governments have taken more initiative, but still, there are a lot of issues and challenges therein working place among women who take part in the scheme� The government should create more awareness programme for rural women so that they could know the important provisions made for them in MGNREGA and payments be made through bank accounts only and on time in particular� It is clear from the literature review, the research implications for the Mahatma Gandhi National Rural Employment Guarantee Scheme will definitely help policymakers, government, panchayats, rural women, and human resource practitioners to provide suitable suggestions and help practitioners and both the state and central government to look at the existing solutions for the


69

problems in domain and adopt the methodologies for new sectors such as MGNREGA�

This study concludes by observation through literature reviews on women empowerment, issues, challenges, and impact through MGNREGA; this act leads to women empowerment through active participation of women in this scheme� MGNREGS envisaged as a women’s empowerment programme, yet, it has brought economic and social empowerment of women� MGNREGS has certainly empowered women workers economically and socially, “Gender - Neutral Measures” such as increase in participation of women in planning and social audits of MGNREGA implementation of better worksite facilities, proper payment of wages, planning of works in phases and speedy grievance redressed will encourage women to demand more work under this scheme�

References1. Ambasta, P� Shankar P�S�V� and Shah M� “Two

Years of NREGA: The Road Ahead,” Economic and Political Weekly, February-23� 2008�

2. Bhatia, K� and A� Adhikari “NREGA Wage Payments: Can We Bank on the Banks,” Economic and Political Weekly, vol� 65, no� 1, 2 January 2010�

3. Dreze, J� ‘Employment Guarantee and the Right to Work’, in The Battle for Employment Guarantee, ed� R� Khera, New Delhi: Oxford University Press� 2011�

4. Dreze, J� “Breaking the Nexus of Corruption,” in The Battle for Employment Guarantee, ed� R� Khera, New Delhi: Oxford University Press� 2011�

5. Dreze, J�, and R� Khera: “The Battle for Employment Guarantee,” in the Battle for Employment Guarantee, ed� R� Khera, New Delhi: Oxford University Press� 2010�

6. Government of India (2004): National Employment Guarantee Act, New Delhi: Government of India�

7. Government of India, Ministry of Rural Development: Mahatma Gandhi National Rural

Employment Guarantee Act 2005, Operational

Guidelines 4th Edition, GoI, New Delhi� 2013�

8. Government of India, Report of the Working

Group on Planning and Execution, Central

Employment Guarantee Council, 2010�

9. Government of India, Ministry of Rural

Development: Mahatma Gandhi National Rural

Employment Guarantee Act 2005 Operational

Guidelines 4th Edition, GoI, New Delhi� 2010�

10. Government of India, Report of The Working

Group on Planning and Execution, Central

Employment Guarantee Council, available at,

2010�

11. Ratna M� Sudarshan (2011): India’s National

Rural Employment Guarantee Act: women’s

participation and impacts in Himachal

Pradesh, Kerala, and Rajasthan, CSP Research

Report 06, Centre for Social Protection UK,

January�

12. Shah, Mihir� “NREGA- A Historic Opportunity,”

Economic and Political Weekly, 2004�

13. Sharma, A� Rights-based Legal Guarantee

as Development Policy: A Discussion on the

Mahatma Gandhi National Rural Employment

Guarantee Act (MGNREGA), New Delhi: UNDP,

2010�

14. Sudha, Narayanan� Employment Guarantee,

Women’s work and Childcare, Economic and

Political Weekly, September: 10-14� 2008�

15. Tata Institute of Social Sciences (TISS): An

Evaluation of MGNREGA in Kerala: Report

submitted to the State Government of Kerala,

Mumbai: TISS, October� 2011�

16. Verma, S� MGNREGA Assets and Rural Water

Security: Synthesis of Field Studies in Bihar,

Gujarat, Kerala and Rajasthan, Annand:

International Water Management Institute

(IWMI)� 2011�

17. Ganesh, Kumar A�, Mishra S� And Panda M�

“Employment Guarantee for Rural India,”

Economic and Political Weekly, December -18�

2004�

70

Santosh GuptaCEO, ISRN

Making Agriculture a tool of Inclusive Growth (Economic Democracy)“Farmer’s Welfare: From Vision to Reality”

With over 18% contribution to the economy and an employer to half of its inhabitants, Indian agriculture is rightfully celebrated as the backbone of India� Agricultural development is a precondition for national prosperity� This industry has historically evolved from the archaic bullock carts and traditional manure to present forms of mechanized cultivation, hyper productive grain breed and modern land utilization� As Prime Minister Narendra Modi rightly emphasized, India’s agriculture mantra should be “per drop, more crop”� Keeping this mantra in mind, the Indian agriculture sector has been incessantly progressing towards technological upgradation, cost-effectiveness and improved productivity over the past years�

TRANSFORMING FARMERS INTO

AGRIBUSINESSMEN: Making the Huge Difference

Like a foetus is connected to his mother via umbilical cord, the umbilical cord connecting mankinds to the mother earth are FARMERS. Farming requires a lot of physical and mental exhaustion and workforce with already stressed up mind and unwillingness to work is a concern for any

industry. But the industry feeding the nation needs special attention and care. Motivating the feeders of a nation should be given priority. No farmer in today’s world wants his son to become farmer. And this thought is a matter of concern. Why is this the case? Why don’t farmers want their son to become farmers? Answers are many. For a plant to grow, watering the roots is a must. Similarly the process of motivating our farmers should start from the root, from changing the terminologies. Calling a farmer an agriculturist, an agro- businessman, an agro-scientist or anything similar, may generate a beam of motivation to become an entrepreneur. Motivation is quintessential for anyone to put his entrepreneurial skills into action. And if a farmer can be motivated just by referring to him with some other terminology, then that shouldn’t be an issue. Calling them entrepreneurs would motivate them for becoming one. Agriculture should be considered as an enterprise and farmers, as entrepreneurs�

Reiterating the current government’s commitment to the goal of doubling farmers’ income by 2022 or by India’s 75th independence year, the Union Budget 2018 gave a big thrust to agriculture and the related agritech sector�1 Finance Minister Arun Jaitley’s fifth and last union budget introduced a major reform that the minimum support price (MSP) for all agriculture produce would be fixed at a level to ensure the farmer a minimum return of one and a half times over the production cost� This might be the first major agricultural reform


71

India has seen in a long time� Overall, budgetary allocation for the agriculture ministry went up by about 15%, from Rs� 50,264 crore in 2017-18 (revised estimates or RE) to Rs� 57,600 crore in 2018-19 (budget estimates or BE)�

Among major schemes, outlays on crop insurance were raised from Rs� 10,698 crore (2017-18 RE) to Rs� 13, 000 crore (2018-19 BE), while those on micro irrigation were raised from Rs� �3, 000 crore to Rs� 4, 000 crore� In other measures, the finance minister announced the creation of a Rs� 2,000 crore agro-market infrastructure fund to connect 22,000 rural markets to the electronic national agriculture market (eNAM) platform� Finance Minister also announced plans to develop a cluster- based model of horticulture to assist groups of farmers all the way from production to marketing� To address production and price fluctuations in onion, potatoes and tomatoes—the most widely consumed vegetables—the budget announced a new programme, Operation Greens, (Rs� 500 crore) that he said would be similar to Operation Flood for promoting dairy� To give a boost to fisheries and animal husbandry, the finance minister announced a Rs� 10,000 crore fund under apex rural bank NABARD� The budget also set a target of disbursing Rs� 11 trillion toward agriculture credit in 2018-19, a 10% rise over the previous year’s target� To help Indian farmers benefit from higher exports, the budget promised to liberalize farm export policies and help set up state-of-the-art testing facilities in mega food parks�

“The production of food grains in India reached a record 275�68 million tonnes (MT) during FY 2016-17, as per the Fourth Advance Estimates (AE) released by the Department of Agriculture, Cooperation and Farmers Welfare, Government of India�” 2� With the emergence and popularization of applications such as Foodpanda, Zomato, Swiggy etc�, the online food delivery industry grew at 150 per cent year-on-year with an estimated Gross Merchandise Value (GMV) of US$ 300 million in 2016� 3

As per the latest estimates, spice trade in the subcontinent has grown by 9 per cent in volume

and 5 per cent in value year-on-year to 660,975 tones and US$ 1�87 billion respectively, during April- December 2016� As per reports and research conducted by the Coffee Board of India, the total output of coffee (2016-17) combining varieties of Arabica and Robusta stood at 3,12,000 MT whereas the Post-Blossom estimates for 2017-18 has been placed at 3,50,400 MT�4 This steady growth in terms of coffee output is certainly positively indicative of a growing domestic and international demand for Indian coffee traditionally brewed in the southern states of Andhra Pradesh, Tamil Nadu and Karnataka�

Revolutionizing the Indian Agriculture - The Need of the Hour

“Food is the moral right of all who are born into this world” Norman Borloug

Based on the above quote, the very concept of the Green Revolution was a scientific discovery in the times when the Indian economy was hardest hit by famines and endemic diseases� India began its own Green Revolution program of plant breeding, irrigation development, and financing of agrochemicals� India soon adopted IR8 – a semi-dwarf rice variety developed by the International Rice Research Institute (IRRI) that was a success throughout Asia and dubbed the “Miracle Rice”�

Today, the Indian agricultural sector needs a similar revolution to bring the priority issues into focus and give a boost to agricultural productivity and growth� Such a revolution requires identification of key areas where reforms are needed, followed by strategy formulation and its efficient implementation� The need of the hour is to promote new technologies and reform agricultural research and extension� Subsidies on power, fertilizers and irrigation have progressively come to dominate Government expenditures on the sector, and are now four times larger than investment expenditures, crowding out top priorities such as agricultural research and extension�

Another crucial aspect is the improvement of water resources and irrigation/drainage


72

management� Increasing competition for water between industry, domestic use and agriculture has highlighted the need to plan and manage water on a river basin and multi-sectoral basis�5 As per MS Swaminathan, Land and water management should be given ‘Number One’ priority for achieving evergreen revolution� Modernizing Irrigation and Drainage Departments to integrate the participation of farmers and other agencies in managing irrigation water, improving cost recovery, rationalizing public expenditures, with priority to completing schemes with the highest returns, and allocating sufficient resources for operations and maintenance for the sustainability of investments is important�

*Facilitating agricultural diversification to higher-value commodities is another key area that has wide scope for integrated action� Encouraging farmers to diversify to higher value commodities will be a significant factor for higher agricultural growth, particularly in rain-fed areas where poverty is high� Some agricultural sub-sectors have particularly high potential for expansion, notably dairy� Milk production is constrained, however, by the poor genetic quality of cows, inadequate nutrients, inaccessible veterinary care, and other factors� A targeted program to tackle these constraints could boost production and have good impact on poverty� The exemplary planning efforts of the Agriculture Ministry deserves a mention here� According to the Agriculture Ministry, 50,000 hectares of area is available for coconut cultivation in Bihar�6 The Coconut Development Board plans to equip the farmers with the right inputs and training, thus making India the world leader in production, productivity, processing for value addition and export of coconut�

Besides, there is a need to eliminate the multi-layered chain between the farmers and the final consumers which helps the middlemen to exploit poor farmers� An excellent example of this is that of the Maharashtra State Agriculture Marketing Board (MSAMB) which has operationalised 31 farmer-to-consumer markets in the state, and plans to open 100 more such markets in the future, which would facilitate better financial

remunerations for the farmers by allowing them to directly sell their produce in open markets�

One of the most important aspects is promotion of entrepreneurship among farmers to help them climb up the supply chain and obtain better incomes for a higher standard of living� A rural livelihood program that empowers communities to become self-reliant is needed where such programs do not just promote the formation of Self-Help Groups and increase in community savings, but also promote local entrepreneurial initiatives to increase rural incomes and employment� What the rural India needs today is the training and development of the community members in areas of sustainable agricultural practices, financial literacy, digital literacy and entrepreneurship development to be able to gain the strength to negotiate better prices and market access for their products, and also gain the political power over local governments to provide them with better technical and social services� For instance, with an aim to boost innovation and entrepreneurship in agriculture, the Government of India is introducing a new AGRI-UDAAN programme to mentor start-ups and to enable them to connect with potential investors�

On carefully analyzing, one can conclude that private sector investments in the agricultural sector are relatively less� The government needs to create an enabling environment to attract private sector investment to the same area� Private sector players in agriculture can do miracles for farmers of India, private players can help in capitalizing and taping important areas like oil pulses and pulses�7 Apart from this, they can help farmers realize their full potential and can provide competitive prices for their produce�

Turning Goals into Outcomes – Government Initiatives So FarIndian Government has taken several initiatives to bring about a positive change in the agricultural sector eventually impacting the lives of farmers� The NITI Aayog has proposed various reforms in India’s agriculture sector, including liberal


73

contract farming, direct purchase from farmers

by private players, direct sale by farmers to

consumers, and single trader license, among

other measures, in order to double rural income

in the next five years� The Ministry of Agriculture,

Government of India, has been conducting

various consultations and seeking suggestions

from numerous stakeholders in the agriculture

sector, in order to devise a strategy to achieve the

goal of doubling the average income of a farmer

household at current prices from Rs� 96,703 in

2015-16 to Rs� 219,724 by 2022-23�8 The good

news is that the Government is already set on the

path to encounter the key hurdles of the farming

sector through its numerous progressive schemes

and policies�

Given the importance of the agriculture sector,

the Government of India, in its Budget 2017–

18, planned several steps for the sustainable

development of agriculture by increasing the total

allocation for rural, agricultural and allied sectors

for FY 2017-18 by 24 per cent year-on-year to Rs�

1,87,223 crore� A dedicated micro-irrigation fund

was set up by National Bank for Agriculture and

Rural Development (NABARD) with a corpus of Rs�

5,000 crore� The government also set up a dairy

processing fund of Rs� 8,000 crore over three years

with initial corpus of Rs� 2,000 crore� With the

motive to leverage technology to connect farmers

from the smallest villages to the biggest markets

and neutralize the role of middlemen in the farm

trade, a new platform for selling agricultural

produce named e-RaKAM was launched by the

Government of India in August,2017 and will

operate as a joint initiative of the Kolkata-based

MSTC Ltd and Central Railside Warehousing

Company (CRWC) Ltd� , New Delhi�E-RaKAM

aims to bring together farmers, farmer producer

organizations (FPOs), PSUs, and buyers on a single

platform to ease the selling and buying process of

agricultural products�

9 The portal will not only help farmers get

reasonableprice for their produce, but also save

them the effort of carting the produce to the mandi�

CWRC, a subsidiary of the Central Warehousing

Corporation Ltd, will provide logistics support for

sellers and buyers in case they need it�

Owing to the essentiality of technological

intervention and innovation in the Indian

agriculture sector, the signing of the bilateral

investment agreement between India and Brazil

is a welcome step by the Government of India�10

The agreement is aimed at enhancing cooperation

in areas of agriculture, cattle genomics, ship

building, pharmaceuticals, defence production,

ethanol production and oil and gas, between the

countries� Similarly, India and Israel are working

on five- year cooperation plan for agriculture and

water which aims to strengthen their partnership

in the farm sector� A three-year joint programme

has already commenced, under which the Centres

of Excellence (COEs) are being set up across the

country to train farmers about Israeli farm and

water technologies� As many as 28 such centres are

being set up under the programme� Also, the UN

International Fund for Agricultural Development

(IFAD) and the Indian Government signed a US$

168 million pact to sustainably raise income and

food security for tribal farming households in

North- East India�

India is a water stressed country, 52% of cropped

area remains without irrigation and some regions

are chronically water stressed� To this effect,

Government of India has launched the Pradhan

Mantri Krishi Sinchayee Yojana (PMKSY) with

an investment of Rs� 50,000 crore aimed at

development of irrigation sources for providing

a permanent solution from drought� This scheme

has been formulated with the vision of extending

the coverage of irrigation ‘Har Khet kopani’ and

improving water use efficiency ‘More crop per

drop’ in a focused manner with end to end solution

on source creation, distribution, management,

field application and extension activities� Farmers

from across the length and breadth of the nation,

ranging from Himachal Pradesh in the north to

Andhra Pradesh in the south and from Gujarat in

the west to Mizoram in the east, have benefited

from this scheme� For instance, in Pune district of

Maharashtra, irrigation potential increased by


74

60,541 Ha, with increase in coverage under micro-irrigation by 4,595 Ha� Also, 3,099 water harvesting structures were created in the district under this scheme� Under the new budget for financial year 2018-19, 96 deprived irrigation districts will be taken up with an allocation of INR 2,600 Crores under this scheme�

Addressing the two-day conference on ‘Agriculture 2022: Doubling Farmers’ Income’, PM Narendra Modi proposed to launch “Start-Up Agri India” scheme to support agritech startups working to make the agricultural process more efficient� Such measures are indicative of a shift from the populist freebies in the agriculture sector to the much needed long-term investment boost which can help the Indian farms go a long way towards achieving efficiency in production and international competitiveness for their products�

The Way Forward –NSSO’s last Situation Assessment Survey of agricultural households implied that 40 per cent of incomes earned by agricultural households were due to non-farm sources�11 While agriculture’s share in rural employment is 64 per cent� Hence, it is time for the inclusion and application of sustainable practices in the agricultural sector to bring about a progressive change� The government has initiated several programs and schemes for betterment of Indian agriculture as already mentioned, though many a times these initiatives could not reach the target population due to lack of knowledge amongst farmers with respect to these policies�

Tackling the huge gap that is out there between policies and their implementation, the Ministry of Agriculture can formulate an Agri Youth Training Program that would lead to technical knowledge dissemination amongst farmers enhancing their skills and equipping them with the appropriate government schemes and resources so that full potential of these schemes can be utilized�

Making entrepreneurs out of farmers require the involvement of various stakeholders as farming in and by itself is a diverse sector� Connecting

scientists and farmers where FPOs can be linked

with different agricultural research organizations

will lead to well informed farmers who can apply

the technical knowledge in farming practices�

Individual scientists specializing in specific

agricultural products or organizations like

ICAR, Indian Agricultural Research Institute, etc�

can provide latest information on processing

technologies to enhance productivity� In

a competitive business environment, this

information, which is normally unavailable to

smallholder farmers in remote areas is a key to

making a profit� Through this networking farmers

can also ask scientists about latest solutions to

pest control and other technical solutions to their

problems and hence such network can reduce

the risk of farmers doing the business in an

uninformed manner�

Further, the promotion of farmer’s public private

partnership in the agricultural sphere through

organized business meets can make farmers

more prosperous and aware of the ongoing

market trends� Through these meets the effective

networking of farmers and private companies

can materialize where the companies can directly

interact with farmers reducing the exploitative

role of the mediators� These companies can then

sponsor farmers and the technology that they

would require in harvesting the particular product

required by the company� In addition to this,

the meet can be a platform for crop marketing,

and gaining market contracts helping farmers to

directly work with manufacturers and help get

the best prices possible for agrochemicals, seeds,

fertilizers, equipment and other related farm

services�

There are several ways these schemes can be

made more effective, for instance, Farmers should

be given opportunities to develop and utilize

entrepreneurial skills� Mentoring in agriculture

can improve the technique, knowledge and

accessibility towards resources� A mentor will

be a link between farmers and government� He/

she will be playing diverse roles simultaneously,

vis-à-vis, voice of aggrieved and agitated farmers,


75

facilitator, motivator, mobiliser, advocate and guide� Mentoring can have the following benefits:

� Better marketing with greater success� � Special coach to individuals, a coach that

focuses on results, changing skills of a learner and getting the task done, coming down from a top down approach�

� This will be a learning process that allows self-reflection�

� This will focus on solutions and long-term results and develops skills for lifetime�

Mentoring would, in turn, help generate employment for rural youth by way of creating more jobs for suitably qualified individuals who can contribute to the farmer mentoring facilities by use of their specialized knowledge and skills in agricultural science, agri-business economics, sustainable farm management and agricultural research and development� Also, increasing profitability in agriculture, resulting from efficient mentoring, could play a role in attracting more and more private and foreign investment, for instance, through Agricultural Investment Summits, thus giving a boost to rural investment� Besides, mentoring can prove to be boon for the credit markets by consequently reducing the element of risk and uncertainty associated with farm loans, which is an obvious outcome of improved productivity and profitability in agriculture through mentoring�

India’s agricultural sector is considered highly regulated due to the wide involvement of the government through the system of Minimum Support Prices� It is true that the sector needs to work upon a number of weaknesses to overcome the caveats of low yield, crop failures, infrastructural deficiencies and technological backwardness� But on the other hand, it must be mentioned here that once the agriculture sector manages to get rid of the above stated problems, it must be deregulated in terms of agricultural prices and should operate under the price mechanism controlled by the market forces of demand and supply�

This would help transform the agricultural industry into a high yielding industry, subsequently adding more value to the country’s GDP and increasing the pace of economic development� Post such advances in the primary sector, measures could be taken for the establishment of an Agriculture Industry Chamber which could perform the functions of boosting the productivity and reducing the risk-return ratio in the agricultural sector, whereby the farmers would not just be farm labourers, but rather entrepreneurs or agribusinessmen who indulge in a sustainable profit-earning enterprise called agriculture�

From its archival and crude beginnings under the colonial rulers to being globally positioned as 2nd in terms of combined agricultural and horticultural produce internationally, the journey of the Indian fields has certainly been elemental in propelling long term ramifications in societal structure, values and economic dynamism of the country� India is currently the second fastest growing economy in the world and is expected to be the fastest growing economy soon, where the bold reforms and continuous efforts of the government is playing a vital role� But, it needs to be added here that in today’s dynamic and rapidly advancing global economy, a more stringent and determined approach towards agricultural growth needs to be adopted as well as implemented to achieve the goal of doubling farm incomes by the year 2022� An even more organized and speedy communication between the different government departments and agencies, grassroot level voluntary organizations and the community is what would help the nation achieve its future goals of inclusive growth and development� Agricultural development has been observed to be the basic precondition of sectoral diversification and development of the economy� Thus, prospering farms are one of the essential tools to pave the way towards a prospering and shining India�

“An Industry that feeds you is an industry worth fighting for”


76

References1� Budget speech; Union Budget� Accessed on 24th March

2018� https://www�indiabudget�gov�in/ub2018- 19/

bs/bs�pdf

2� Fourth Advance Estimates, released by the Department

of Agriculture, Cooperation and Farmers’ Welfare,

Government of India

3� Online Food Delivery: A RedSeer Perspective; http://

redseer�com/wp- content/ploads/2017/10/6�-

Analyst- Report-Food-tech_CY16�pdf

4� Statistics on Coffee, Production in Major States/

Districts Of India(in MTs); https://www�indiacoffee�

org/coffee- statistics�html

5� India: Issues and Priorities for Agriculture http://

www�worldbank�org/en/news/feature/2012/05/17/

india- agriculture-issues-priorities

6� Centre boost for coconut, Accessed on 24th February

2018 https://www�telegraphindia�com/states/bihar/

centre- boost-for-coconut-204111

7� Indian Pulses and Grains Association, ipga�co�in

8� Ministry of Agriculture and Farmers Welfare,

agriculture�gov�in

9� Government launches e-RaKAM portal for selling

agri produce; Accessed on 24th April 2018 https://

economictimes�indiatimes�com/news/economy/

agriculture/government-launches-e-rakam- portal-for-

selling-agri-produce/articleshow/59868582�cms

10� BRICS: India, Brazil sign pacts to deepen cooperation

in agri, cattle genomics/ https://www�business-

standard�com/article/current-affairs/brics-india-

brazil-sign-pacts-to-deepen-cooperation-in- agri-

cattle-genomics-116101700936_1�html

11� Key Indicators of Situation of Agricultural Households

in India, NSS 70th Round, Ministry of Statistics and

Programme Implementation, Government of India�

Dr. Vinay Sahasrabuddhe

(Editor in Chief)

President, Indian Council for

Cultural Relations, New Delhi

Vice Chairman

Rambhau Mhalgi Prabodhini, Mumbai

National Vice President

Bhartiya Janata Party

Mohan Kashikar


Rashtrasant Tukdoji Maharaj

University

Nagpur, Maharashtra

Mahesh Bhagwat


Mithibai College, Vile Parle (W)

Mumbai, Maharashtra

P. Kanagasabapathi

Professor Emeritus

Madars Institute of Technology

Anna University, Tamilnadu

Ravi Pokharna

(Editorial Co-ordinator)

Executive Head (Projects &

Administration)


R. Balasubramaniam

Founder and Chairman

Grassroots Research and

Advocacy Movement (GRAAM)

Mysore, Karnataka

Dr. Jagdish Jadhav

(Associate Editor)

Associate Professor

Department of Social Work

Central University of Rajasthan

Santishree Dhulipudi Pandit

Professor, Department of Politics

and Public Administration

Savitribai Phule University of Pune

Maharashtra

Sushma Yadav

Vice Chancellor

Bhagat Phool Singh (BPS)

Mahila Vishwavidyalaya

Khanpur Kalan, Haryana

Ravindra Sathe

Director-General


Rambhau Mhalgi Prabodhini (RMP), a Mumbai based research and training academy working for capacity building of people’s representatives, political party workers as well as voluntary social workers. Indian Institute of Democratic Leadership (IIDL) is a humble endevour of RMP wherein IIDL offers one-year Post Graduate Programme in Democracy, Leadership and Governance which is a unique programme of its kind and targeted at students and young professionals who wish to make career in the field of politics, governance, public affairs, journalism and voluntary organisations.

The Indian Journal of Democratic Governance (IJDG) strives for bringing out empirical and conceptual clarity to the social issues and challenges with the answer of governance. The Journal seeks to enhance understanding of the democratic governance through the integration of knowledge base, empirical evidences and innovative practices to contribute to the planning and implementation of suitable measures for national and regional development and policy formulation at different levels. The main priority of the Journal is to unveil indigenous and modern approaches of governance to create a space for assimilating the both in accordance with the current trends that leads to sustainability in all spheres of human life.

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